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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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Saturday, 22 February 14
POTEN RAISES THE QUESTION OF ACCURACY IN CALCULATING TANKER FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the tanker market has grown in complexity over the course of the past few years, the question of whether the traditional methods of assessing rat ...
Friday, 21 February 14
INDONESIA PLAN TO CAP COAL OUTPUT AND HIKE ROYALTY; START MUSIC
COALspot.com: Energy and Mineral Resources Ministy of Indonesia is planning to increase the royalty for coal miners particularly for Mining Business ...
Friday, 21 February 14
THE WORLD'S SECOND LARGEST COAL MINER MINED 19.2 MMST OF COAL IN A WEEK, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, mined approximately 19.2 million short tons (mmst) of coal in a w ...
Friday, 21 February 14
DRY BULK MARKET SHOWS SIGNS OF LIFE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has slowly started to emerge from the downfall it's been since the start of the year, as rates have began to pick up over the c ...
Friday, 21 February 14
INDONESIA COAL OUTPUT CAP TO HURT MINERS RELIANT ON VOLUME GROWTH, FITCH SAYS
Fitch Ratings says that the credit profiles of mining sub-contractors and miners highly reliant on increasing volumes to support high debt servicing w ...
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- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- VISA Power Limited - India
- Lanco Infratech Ltd - India
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- Bharathi Cement Corporation - India
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Manunggal Multi Energi - Indonesia
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Energy Link Ltd, New Zealand
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Wood Mackenzie - Singapore
- Sojitz Corporation - Japan
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Planning Commission, India
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- The Treasury - Australian Government
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Australian Coal Association
- Latin American Coal - Colombia
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- PTC India Limited - India
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- MS Steel International - UAE
- Eastern Coal Council - USA
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
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