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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, 19 November 12
GOVT PREPARES TO FACE ANOTHER SUIT ON MINING LAW - THE JAKARTA POST
The government is gearing up to face a complaint on the 2009 Mining Law prepared by the same organization that previously brought down upstream oil ...
Monday, 19 November 12
IHS MCCLOSKEY ASIA PACIFIC COAL OUTLOOK CONFERENCE 2012
With the current global oversupply of thermal coal showing no signs of abating and spot prices falling to a two-year low, concerns are growing that ...
Sunday, 18 November 12
INDONESIAN SUB BITUMINOUS COAL SWAPS FOR JANUARY 2013 DELIVERY GAINS 1.29 PERCENT WOW
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for January 2013 delivery gains 1.29 percent WoW and 0.25 percent DoD on Friday, 16 Novembe ...
Saturday, 17 November 12
THE SUPRAMAX FREIGHT RATES FROM INDONESIA TO INDIA ARE EXPECTED TO BE UP NEXT WEEK - VISTAAR
COALspot.com - This week market sentiments ended positive with all the segments ending higher except for handy size which was almost at same levels ...
Saturday, 17 November 12
RECORD DEMOLITION ACTIVITY SEEKS TO CURB TONNAGE OVERSUPPLY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
This year will prove to be another record-breaker in terms of scrapping of older vessels across all shipping segments, as the equally feverish pace ...
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- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
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- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Economic Council, Georgia
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
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- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Merrill Lynch Commodities Europe
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Deloitte Consulting - India
- Aditya Birla Group - India
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Baiduri Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- Makarim & Taira - Indonesia
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- Gujarat Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- Australian Coal Association
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
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