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