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