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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, 25 March 09
MINISTER ASKS ROYALTIES BE PAID IN COAL, NOT CURRENCY - THE JAKARTA POST
Coal companies could pay their royalties to the government in coal, rather than in rupiah, under a proposal made by Energy and Mineral Resources Min ...
Wednesday, 25 March 09
INDONESIA'S STATE ELECTRICITY COMPANY DEMAND FOR COAL TO SOAR NEXT YEAR AS POWER OUTPUT RISES - THE JAKARTA POST
State electricity company PT PLN will need more coal next year as it seeks to generate more power through new plants operated by its subsidiary PT I ...
Tuesday, 24 March 09
INDONESIA'S KPC AGREES FIRST MAJOR CHINA COAL DEAL - REUTERS
Indonesian miner PT Kaltim Prima Coal last week agreed its first major long-term deal to sell thermal coal to China, with 1 million tonnes to be shi ...
Tuesday, 24 March 09
INDONESIA ANTAM'S SETS ASIDE $37 MLN FOR COAL MINES - REUTERS
Indonesian state-owned miner, PT Aneka Tambang Tbk, has allocated $37 million for acquiring coal mines, the company said on Monday.
Antam said la ...
Monday, 23 March 09
NIPPON STEEL, BMA AGREE TO 57 PCT CUT IN COAL PRICE - REUTERS
Nippon Steel Corp has agreed with Australia's BHP Billiton Mitsubishi Alliance (BMA) to pay $128 to $129 per tonne for coking coal in the year from ...
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- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Planning Commission, India
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- Aditya Birla Group - India
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Trasteel International SA, Italy
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Petron Corporation, Philippines
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Sindya Power Generating Company Private Ltd
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Heidelberg Cement - Germany
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- GMR Energy Limited - India
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- White Energy Company Limited
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- The Treasury - Australian Government
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Energy Link Ltd, New Zealand
- The University of Queensland
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
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