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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, 14 August 15
CONDITIONS AND COMPLEXITIES IN A TRIPARTITE AGREEMENT: BE SPECIFIC! - INCE & CO
KNOWLEDGE TO ELEVATE
A tripartite agreement reached between the Owners, the Shippers and the Receivers provided that demurrage be paid to the ...
Thursday, 13 August 15
THE RATES FOR CAPES KEPT RALLYING LAST WEEK - INTERMODAL
COALspot.com: Strong Capesize performance kept supporting the Dry Bulk market last week, which noted another positive weekly closing, while rates f ...
Thursday, 13 August 15
FOB RICHARDS BAY COAL SWAPS CONTINUE FALLING
COALspot.com: API4 FOB Richards Bay Coal swap for delivery 4Q' 2015 declined month over month and week over week.
The 4Q swap was down US$ ...
Wednesday, 12 August 15
DRY BULK MARKET: WITHOUT A DOUBT REACHED HEALTHIER LEVEL
A few weeks before the end of the summer season, the BDI is hovering around 1,200 points, providing some much needed optimism to all Dry Bulk marke ...
Wednesday, 12 August 15
REGULATION CURBS POWER OF LOCAL AUTHORITIES IN MINING SECTOR IN INDONESIA - FLORENCE G. SANTOSO
The Indonesian Government appears to be getting serious about stripping Regents of the authority to issue mining licenses. The Government took the ...
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- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Aditya Birla Group - India
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Metalloyd Limited - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Bhatia International Limited - India
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wood Mackenzie - Singapore
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Georgia Ports Authority, United States
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Agrawal Coal Company - India
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Indogreen Group - Indonesia
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