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