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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, 03 March 16
BDI FURTHER STRENGTHENING; THE INCREASE IN RATES WAS NOT SUBSTANTIAL
COALspot.com: The BDI closed off on a positive note for a second week in a row, further strengthening the belief that the market might be bottoming ...
Thursday, 03 March 16
RIO TINTO COMPLETES SALE OF INTEREST IN BENGALLA JOINT VENTURE FOR US$616.7 MILLION
COALspot.com: Rio Tinto has completed the sale of its 40 per cent interest in the Bengalla coal Joint Venture in Australia to New Hope Corporation ...
Wednesday, 02 March 16
RE-EVALUATION OF MINING LICENSES CLEAN AND CLEAR STATUS IN INDONESIA
COALspot.com: In connection with the transfer of mining authority from Regents/Mayors to Governors1 and from Regents/Mayors and Governors to t ...
Wednesday, 02 March 16
OIL MY GOD.....!!!!
OIL my GOD….!!!!
The oil price “crash” that started in 2014 was caused by a glut of practically unwanted oil. Producers had be ...
Tuesday, 01 March 16
CS 42 (4200 GAR) COAL INDEX CLOSED AT US$ 27.11 A TON ON 26 FEBRUARY
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline 0.31 percent week over week to averaging $38.77 per ton on this past Friday, ...
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- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- The University of Queensland
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- VISA Power Limited - India
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Energy Link Ltd, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- White Energy Company Limited
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Mercator Lines Limited - India
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
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