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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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- PetroVietnam Power Coal Import and Supply Company
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- Australian Coal Association
- Singapore Mercantile Exchange
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- PTC India Limited - India
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Baramulti Group, Indonesia
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Edison Trading Spa - Italy
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- CNBM International Corporation - China
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Star Paper Mills Limited - India
- Gujarat Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
- OPG Power Generation Pvt Ltd - India
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Larsen & Toubro Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- IEA Clean Coal Centre - UK
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- The University of Queensland
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Jindal Steel & Power Ltd - India
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- Kapuas Tunggal Persada - Indonesia
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
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