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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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Wednesday, 10 October 12
TAPPING OPPORTUNITIES WITHIN GLOBAL ECONOMIC PERSPECTIVE
Press Release: Mining sector will continue to play a significant role in supporting industrial and economic development in Indonesia which is curren ...
Tuesday, 09 October 12
REALM RESOURCES RECOMMENCES DRILLING AT KATINGAN RIA COAL PROJECT
COALspot.com : Realm Resources Ltd. (ASX) has announced that it has commenced work on the phase three technical programme at its Katingan Project in ...
Sunday, 07 October 12
INDONESIAN GOVERNMENT DECLARED HBA FELL AGAIN IN OCTOBER
COALspot.com - The Indonesian government’s declared coal reference price has lost US$ 0.17 per MT M-M.
The monthly coal referen ...
Saturday, 06 October 12
CFR SOUTH CHINA COAL SWAPS FOR DECEMBER'13 DELIVERY GAINED 1.3 PERCENT W-W
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for December 2012 delivery gained 0.098 percent and 0.164 percent W-W and D-D respectively o ...
Saturday, 06 October 12
FREIGHT MARKET IS LIKELY TO PICK AFTER THE HOLIDAYS IN CHINA - VISTAAR
COALspot.com - The freight market appeared to be seeing some increase BDI up by 14.23 pct closing at 875 points. The Cape and Panamax index also saw ...
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- GMR Energy Limited - India
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- Dalmia Cement Bharat India
- Parliament of New Zealand
- Mjunction Services Limited - India
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
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- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
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- The State Trading Corporation of India Ltd
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- Indika Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- Mintek Dendrill Indonesia
- Merrill Lynch Commodities Europe
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- Australian Coal Association
- Asmin Koalindo Tuhup - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
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- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- Binh Thuan Hamico - Vietnam
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- GVK Power & Infra Limited - India
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- ASAPP Information Group - India
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- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- Vizag Seaport Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Romanian Commodities Exchange
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- Antam Resourcindo - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
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- Indian Energy Exchange, India
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Mercuria Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- White Energy Company Limited
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- Ceylon Electricity Board - Sri Lanka
- TNB Fuel Sdn Bhd - Malaysia
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
- Thiess Contractors Indonesia
- The Treasury - Australian Government
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Grasim Industreis Ltd - India
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
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- Kartika Selabumi Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
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