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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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Friday, 02 July 10
MINERALS RESOURCE TAXATION IN AUSTRALIA - PRESS RELEASE
Press Release : Rio Tinto acknowledges the Australian Government’s announcement that the Resource Super Profits Tax (RSPT) proposal will be re ...
Thursday, 01 July 10
TATA POWER TO RAISE US$300 MILLION THROUGH ITS COAL SPVS TO FUND ADDITIONAL ACQUISITIONS AND / OR REDUCE OUTSTANDING DEBT
Stock Markets Review reported that, Tata Power, India’s largest private power player has signed an agreement to raise US$300 million in Bhira ...
Thursday, 01 July 10
HELLENIC SHIPPING NEWS POLL: THE BDI WILL STAY ABOVE 3,000 POINTS IN THE SECOND HALF OF 2010
When Hellenic Shipping News Worldwide prepared June’s poll asking readers about where do they think that the Baltic Dry Index (BDI) will range ...
Thursday, 01 July 10
PANAMAX MARKETS CONTINUE TO DROP IN ALL BASINS - FEARNLEYS
Handy
Atlantic rates continue to slide with little activity. Supras open in USG get low 30´s to Med and mid 40´s to FEast. Hmax/Supra ...
Wednesday, 30 June 10
PTBA TO SUPPLY ADDITIONAL 180 MLN TONS OF COAL TO PLN FOR 20 YEARS
COALspot.com: Indonesia's state-owned coal mining company PT Tambang Batubara Bukit Asam Tbk (PTBA) has entered into a new contract with state owne ...
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- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Siam City Cement - Thailand
- GMR Energy Limited - India
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- Australian Coal Association
- Karaikal Port Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Malabar Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Bayan Resources Tbk. - Indonesia
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
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