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