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