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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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- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- Sakthi Sugars Limited - India
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Petron Corporation, Philippines
- Antam Resourcindo - Indonesia
- Indian Energy Exchange, India
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bangladesh Power Developement Board
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Videocon Industries ltd - India
- Bhatia International Limited - India
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- Central Electricity Authority - India
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Gujarat Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- Kartika Selabumi Mining - Indonesia
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- PTC India Limited - India
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- The Treasury - Australian Government
- White Energy Company Limited
- Deloitte Consulting - India
- India Bulls Power Limited - India
- Coastal Gujarat Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Kapuas Tunggal Persada - Indonesia
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- SN Aboitiz Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
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