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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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Thursday, 11 March 10
THE INDIAN MARKET WAS A BIT QUIET BUT STILL FIRM - FEARNLEYS AS
Handy - Atlantic activity has kept its firm tendency throughout the week for handies, with Atlantic RV´s fixed in the USD.16000 region. With s ...
Thursday, 11 March 10
COAL PRICES SET TO RISE AMID CONFUSION OVER QUARTERLY SYSTEM
Trading room reported that, Coal prices are tipped to rise in coming months amid constrained supply and ongoing Chinese demand, and analysts are con ...
Wednesday, 10 March 10
PROTECTED FORESTS NOW UP FOR GRABS FOR MINING
The Jakarta Post reported that, the government has just issued two new regulations on forests, which could allow protected forests to be used for co ...
Tuesday, 09 March 10
REGULATION NO.23 OF 2010 CONCERNING IMPLEMENTATION OF NEW MINING LAW, PROVIDES MORE CLARITY ON OBTAINING A IUP
COALspot.com: Indonesian government has recently issued another regulation related to Law number 4 of 2009 concerning mineral and coal mining. Two r ...
Tuesday, 09 March 10
MINING LAW OPTIMIZES SECTOR
Law No. 4 / 2009 on Mineral and Coal Mining have given a new direction for the future of mining in Indonesia, including Domestic Market Obligation, ...
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- Bangladesh Power Developement Board
- Kideco Jaya Agung - Indonesia
- Manunggal Multi Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Parliament of New Zealand
- Aditya Birla Group - India
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Central Electricity Authority - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Maheswari Brothers Coal Limited - India
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- MS Steel International - UAE
- The University of Queensland
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Indian Energy Exchange, India
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
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