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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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Monday, 20 April 09
PT PAMAPERSADA SEES ITS REVENUE TO CLIMB BY 20% IN 2009 - STEELGURU
PT Pamapersada Nusantara, a unit of Indonesia's PT United Tractors, said that its 2009 profit will be similar to last year, even as it forecasts re ...
Monday, 20 April 09
NIPPON STEEL SEMI-SOFT COAL PRICE SAID TO DROP 67% - BLOOMBERG
Nippon Steel Corp., Japan’s largest mill, will pay up to 67 percent less for semi-soft coking coal this fiscal year, two industry executives w ...
Monday, 20 April 09
INTERNATIONAL INVESTORS SEEK TO SELL ADARO STAKES - MONEY.CNN
Some international investors in PT Adaro Energy ( ADRO.JK) have approached other companies to sell around a combined 17% stake in the coal miner via ...
Friday, 17 April 09
BHATIA COAL INDIA, VITOL IN DISPUTE - COAL JUNCTION
Bhatia Coal India, a subsidiary of the Bhatia International Group, terminated a coal supply contract with traders Vitol and has initiated arbitratio ...
Friday, 17 April 09
JSW TO BUY THERMAL COAL MINE IN AFRICA
Sajjan Jindal-led JSW Energy is close to acquiring a sub-Saharan African thermal coal mine, which has reserves of more than 200 million tons, to min ...
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- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- The University of Queensland
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Madhucon Powers Ltd - India
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Australian Coal Association
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Altura Mining Limited, Indonesia
- Star Paper Mills Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- McConnell Dowell - Australia
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- White Energy Company Limited
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Baramulti Group, Indonesia
- VISA Power Limited - India
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- MS Steel International - UAE
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kumho Petrochemical, South Korea
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Antam Resourcindo - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- SMG Consultants - Indonesia
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