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