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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, 12 November 12
THE ESTABLISHMENT OF NORTH KALIMANTAN AS A NEW PROVINCE WILL NOT AFFECT THE LOCAL MINING COMPANIES
The government of Indonesia has ensured that the establishment of North Kalimantan as a new province will not affect the local mining companies ...
Monday, 12 November 12
DRILLING COMPLETED AT THE MOORLANDS DEPOSIT, WEST BOWEN PROJECT
Press Release - Cuesta Coal Limited (ASX: CQC) (“Cuesta”) is pleased to announce it has completed its exploration activities at the Moor ...
Monday, 12 November 12
BARGE-LOAD OF 5K TONNES OF COAL FROM THE ADK JOINT VENTURE SHIPPED LAST WEEK
COALspot.com - Orpheus Energy (ASX:OEG) has announced that, it has successfully shipped a 5,000 tonne of ADK thermal coal to an Indonesian trading g ...
Sunday, 11 November 12
AN OPTIMISTIC WEEK FOR INDONESIAN SUB-BIT COAL
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for January 2013 delivery gains 2.08 percent WoW and 1.28 percent DoD on Friday, 9 November ...
Sunday, 11 November 12
THE IRON ORE AND COAL PRICES MOVEMENTS REMAINS LOW - VISTAAR
COALspot.com The market remained soft with all the sectors soft.
The BDI and was down by 4.67 pct closing at 940 points, on Friday 9 Novemb ...
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- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
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- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- GMR Energy Limited - India
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
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- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Vizag Seaport Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Makarim & Taira - Indonesia
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- PTC India Limited - India
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- Metalloyd Limited - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Energy Development Corp, Philippines
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Attock Cement Pakistan Limited
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Eastern Energy - Thailand
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Lanco Infratech Ltd - India
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- India Bulls Power Limited - India
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Anglo American - United Kingdom
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Coalindo Energy - Indonesia
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- CNBM International Corporation - China
- Deloitte Consulting - India
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
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