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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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Wednesday, 13 May 09
INDONESIA ADARO NET PROFIT, REVENUE TO RISE IN 2009 - REUTERS
INDONESIA's largest coal producer by market value, PT Adaro Energy Tbk, expects double-digit growth in revenue and net profit this year, an officia ...
Wednesday, 13 May 09
ALPHA TO BUY RIVAL, CREATING NEW US COAL HEAVYWEIGHT - MININGWEEKLY.COM
Alpha Natural Resources, the biggest supplier of metallurgical coal in the US, has agreed to buy Maryland-based rival Foundation Coal for about $1,4 ...
Tuesday, 12 May 09
CHINA MINERS CUT COAL PRICE OFFER TO JAPAN UTILITIES - ALIBABA.COM
* Producers cut offer to $75.50 a tonne from over $80
* Negotiations may conclude soon as price gap narrows
* New offer at discount of about 43 pe ...
Tuesday, 12 May 09
INDO TAMBANGRAYA SEES 2010 COAL OUTPUT UP 25 PCT - REUTERS
Indonesian coal miner, PT Indo Tambangraya Megah (ITMG.JK), expects coal output to increase by up to 25 percent next year as production kicks in at ...
Tuesday, 12 May 09
INDIKA EXPECTS TO INCREASE COAL PRODUCTION BY 12.68% IN 2010 - THE JAKARTA POST
Energy and infrastructure company PT Indika Energy, the parent company of Indonesia's third largest coal producer PT Kideco Jaya Agung, expects its ...
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- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Power Finance Corporation Ltd., India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- The University of Queensland
- Australian Commodity Traders Exchange
- GMR Energy Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Jindal Steel & Power Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Posco Energy - South Korea
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- Indogreen Group - Indonesia
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- Meenaskhi Energy Private Limited - India
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Ambuja Cements Ltd - India
- Australian Coal Association
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- Therma Luzon, Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Parliament of New Zealand
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Gujarat Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
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