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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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Wednesday, 03 December 14
PROGRESSING SMELTER PROJECTS IN INDONESIA
Press Release: Indonesia’s ban on ‘raw mineral export’ that was designed to encouraging downstream investment in mineral processi ...
Wednesday, 03 December 14
SHIPPING MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
The dry bulk market seems unable to turn sentiment round and is still looking for direction. The BCI's 887-point free fall last week had an obv ...
Wednesday, 03 December 14
CAPESIZE DRY BULK CARRIERS ENTER 2015 WITH MIXED FORTUNES, WITH A POSITIVE AND A NEGATIVE SCENARIO BOTH EMERGING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The future of the Capesize dry bulk market appears to be engulfed from mixed “feelings” among analysts and market participants, despite ...
Tuesday, 02 December 14
KEY PLAYERS SHED NEW PERSPECTIVES ON COAL MARKETS
Press Release: Singapore’s ONLY and longest established Coal Trade event. Whilst Coal prices remain challenging, there is widespread consensu ...
Tuesday, 02 December 14
KOMIPO INVITES BIDS FOR 585,000 METRIC TONS OF COAL FOR Q1'15
COALspot.com - Korea Midland Power Co. Ltd. (KOMIPO) is inviting bids for the supply of 585,000 Metric Tons of coal. According to invitation, 5700 ...
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- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- Essar Steel Hazira Ltd - India
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- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- Bharathi Cement Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Parliament of New Zealand
- Marubeni Corporation - India
- Romanian Commodities Exchange
- The University of Queensland
- Videocon Industries ltd - India
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Malabar Cements Ltd - India
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Jaiprakash Power Ventures ltd
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- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Indonesian Coal Mining Association
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- White Energy Company Limited
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
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- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
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