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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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Wednesday, 14 December 16
INTERNATIONAL TRIBUNAL DISMISSED CHURCHILL MINING'S DAMAGES CLAIM AGAINST REPUBLIC OF INDONESIA
The Directors of Churchill Mining plc advise that, the ICSID Tribunal (“Tribunal”) granted Indonesia’s application to dismiss the ...
Wednesday, 14 December 16
20/20 VISION! - JOHN N. COTZIAS
2020; A year that could be changing shipping. In early November, the International Maritime Organization (IMO) announced that it would set a 0.5% s ...
Tuesday, 13 December 16
THE FREIGHT MARKET MAY WELL BE SHOWING SIGNS OF HEADING FOR ITS DOWNWARD CORRECTIVE PHASE - ALLIED
2016 has been a tough market for dry bulkers and through these difficult earnings, we have seen some of the lowest prices being noted historically ...
Tuesday, 13 December 16
COAL DEMAND GROWTH TO STALL AS APPETITE WANES, ACCORDING TO IEA
Growth in global coal demand will stall over the next five years as the appetite for the fuel wanes and other energy sources gain ground, according ...
Monday, 12 December 16
U.S. WEEKLY COAL PRODUCTION TOTALS 16.3 MMST, UP 7.4% - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.3 million short ton ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Wood Mackenzie - Singapore
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- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
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- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
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- Economic Council, Georgia
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- Carbofer General Trading SA - India
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- Siam City Cement PLC, Thailand
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- Romanian Commodities Exchange
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- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
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- Indian Energy Exchange, India
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- Aditya Birla Group - India
- Georgia Ports Authority, United States
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- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- The University of Queensland
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- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
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- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
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- Baramulti Group, Indonesia
- VISA Power Limited - India
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
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- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Global Business Power Corporation, Philippines
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- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
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- Global Green Power PLC Corporation, Philippines
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- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- The Treasury - Australian Government
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- Marubeni Corporation - India
- Planning Commission, India
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
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- Thai Mozambique Logistica
- GMR Energy Limited - India
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- Trasteel International SA, Italy
- Heidelberg Cement - Germany
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- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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