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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, 16 March 09
COAL MINER BUKIT ASAM RECORDS 135% GAIN IN NET PROFIT FOR 2008 - THE JAKARTA GLOBE
Indonesia's state-owned coal miner PT Tambang Batubara Bukit Asam Tbk said its net profit jumped 135 percent last year, having sold more coal at hi ...
Saturday, 14 March 09
NATIONAL ALUMINIUM TO IMPORT COAL NEXT MONTH TO EASE SHORTAGE - BLOOMBERG
Bloomberg reported that, National Aluminium Co., India’s biggest alumina maker, plans to import as much as 150,000 metric tons of coal next mo ...
Friday, 13 March 09
VIETNAM APPROVES TWO COAL-FIRED POWER PLANTS TO MEET DEMAND -THANHNIENNEWS
Thanhnien News reported that, The government has approved a proposal to build two 2,400-megawatt coal-fired power plants in the provinces of Nam Din ...
Friday, 13 March 09
INDONESIAN STATE-RUN COMPANIES PROFIT MAY FALL 10% THIS YEAR -THANHNIENNEWS
Tanhnien news reported that, Indonesian state-run companies’ profits may fall about 10 percent this year as commodity prices decline, cutting ...
Thursday, 12 March 09
INDONESIA'S CIREBON ELEC IN TALKS ON COAL SUPPLIES - REUTERS
Reuters reported that, Indonesia's PT Cirebon Electric Power, an independent power producer, is in talks with a number of coal suppliers to seek a ...
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- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- ICICI Bank Limited - India
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Leighton Contractors Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- The University of Queensland
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Coalindo Energy - Indonesia
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Larsen & Toubro Limited - India
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Energy Development Corp, Philippines
- Chamber of Mines of South Africa
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Lanco Infratech Ltd - India
- Energy Link Ltd, New Zealand
- Kartika Selabumi Mining - Indonesia
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- Gujarat Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- SMC Global Power, Philippines
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
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