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