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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Tuesday, 02 June 09
GOVT FINALIZING DMO MECHANISM, REFERENCE PRICE FOR COAL - THE JAKARTA POST
Indonesia, the world's largest thermal coal exporter, is finalizing regulations on a reference price on coal, on a domestic market obligation (DMO) ...
Tuesday, 02 June 09
CHINA OVERSEAS COAL DEMAND TO STAY BUOYANT-MINERS (REUTERS)
China's demand for overseas coal is expected to stay strong in the second half as long as prices of imported coal maintain a discount to domestic p ...
Tuesday, 02 June 09
INDONESIA'S COAL EXPORTS REACH US$ 3.44 BILLION SO FAR THIS YEAR - TRADINGCHARTS
Indonesia`s coal exports in the January-April 2009 period increased by 21.31 per cent to US$3.44 billion compared to US$2.83 billion in the same per ...
Tuesday, 02 June 09
INDONESIA'S BUKIT ASAM AGREES HIGHER COAL PRICES - REUTERS
Indonesian state coal miner PT Bukit Asam Tbk said it has agreed coal prices for two power plants owned by state electricity firm PT Perusahaan List ...
Tuesday, 02 June 09
ADARO MAY RAISE COAL SALES TO CHINA, INDIA PLANTS - THE JAKARTA GLOBE
PT Adaro Energy, the country’s second-largest coal producer, may increase sales of power-plant coal to China and India on signs of a global ec ...
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- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Straits Asia Resources Limited - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Mercuria Energy - Indonesia
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- New Zealand Coal & Carbon
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- Planning Commission, India
- Romanian Commodities Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- Australian Coal Association
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- India Bulls Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Timah Investasi Mineral - Indoneisa
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- The University of Queensland
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- SMC Global Power, Philippines
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
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