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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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Friday, 04 September 15
GOVERNORS WILL HAVE THE POWER TO REVOKE MINERS' PERMITS: ENERGY MINISTRY - JG
Starting Oct. 1, Indonesia's governors will lawfully become "executors" in revoking the licenses of miners that fail to secure a &quo ...
Thursday, 03 September 15
MINISTRY OF ENERGY AND MINERAL RESOURCES OF INDONESIA TO REVISE HBA METHODOLOGY
COALspot.com: Ministry of Energy and Mineral Resources (ESDM) in process to revise Indonesian Coal Price Reference (HBA) and expected to complete b ...
Thursday, 03 September 15
THE CHINESE STOCK MARKET AND THE CHINESE ECONOMY CONTINUE TO SUBSTANTIALLY AFFECT TRADING - INTERMODAL
The last week of the summer season saw the BDI dipping further on the back of another significant drop in rates for Capes, which brought the market ...
Wednesday, 02 September 15
PORT OF NEWCASTLE SHIPPED 13.46 MMT OF COAL IN JULY; UP 0.66 PER CENT M-O-M
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.224 billi ...
Wednesday, 02 September 15
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS
In the beginning of the summer period SnP activity was firm with numerous buyers, coming mainly from Greece and the Far East, inspecting ships and ...
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- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- Central Java Power - Indonesia
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Singapore Mercantile Exchange
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- PNOC Exploration Corporation - Philippines
- Vizag Seaport Private Limited - India
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- Medco Energi Mining Internasional
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Bhushan Steel Limited - India
- India Bulls Power Limited - India
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Wilmar Investment Holdings
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- Thiess Contractors Indonesia
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- Ministry of Finance - Indonesia
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Semirara Mining and Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Timah Investasi Mineral - Indoneisa
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
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