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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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Monday, 31 December 12
"DISTRESSED", "ECO" AND "FINANCE" ARE THE THREE WORDS WHICH CHARACTERIZED 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2012 was yet another year of speculation, anticipation, pessimism and more speculation in the shipping markets. According to the latest weekly repor ...
Saturday, 29 December 12
SHIPBREAKING YARDS IN INDIA DEMOLISH A TOTAL OF 527 VESSELS IN 2012, BREAKING ALL PREVIOUS RECORDS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
India's ship demolition experts of Star Matrix contemplated this week on the issue of why ships in the range of 1,000 and up to 6,500 liquid tons ( ...
Thursday, 27 December 12
A LOOK AT WORLD TRADE PATTERNS DURING 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
While China's leaders are likely to stick with the 2012 economic growth rate of 7.5% when they chart a course for 2013 - its weakest pace since 199 ...
Thursday, 27 December 12
INDONESIA SHIPPED 33.578* MMT COAL IN NOVEMBER
COALspot.com: Indonesia, the world largest multi grade coal exporter has shipped 33.578* million tons of coal in November 2012. thi ...
Wednesday, 26 December 12
UPDATE ON EXPORT BAN ON RAW MINERALS AND ORE - RITA SUSANTO
COALspot.com - In May 2012, the Minister of Energy and Mineral Resources (“MoEMR”) in Regulation No.7 (“Reg-7”, amended by R ...
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- Billiton Holdings Pty Ltd - Australia
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- SMC Global Power, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- VISA Power Limited - India
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Mintek Dendrill Indonesia
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Medco Energi Mining Internasional
- Sinarmas Energy and Mining - Indonesia
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Bahari Cakrawala Sebuku - Indonesia
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Bangladesh Power Developement Board
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Borneo Indobara - Indonesia
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Deloitte Consulting - India
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Renaissance Capital - South Africa
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
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