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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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Sunday, 16 September 12
GLOBAL LOW DEMAND ; INDONESIA COAL AND CFR SOUTH CHINA COAL SWAPS DIP
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for November 2012 delivery lost 1.345 percent W-O-W on Friday, 14 September 2012, closing but gai ...
Sunday, 16 September 12
THE FREIGHT RATES FROM INDONESIA TO INDIA EXPECTED TO BE STEADY - VISTAAR
COALspot.com - The freight market was mixed with most indices closing positive except for the Panamax index.
The main sentiment seems to be ...
Saturday, 15 September 12
FINANCE MINISTRY OPPOSES TAX INCENTIVE PLAN FOR COAL MINERS - JP
The Jakarta Post reported that, the Finance Ministry has turned down the idea of providing a fiscal incentive to the country’s coal mining ind ...
Friday, 14 September 12
DRY BULK MARKET LOOKS TOWARDS CHINA FOR SOME POSITIVE NEWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the dry bulk market freight rates submerged underwater for a large part of the year, dry bulk owners are looking for some positive enhancement ...
Friday, 14 September 12
GOVT OFFERS CONDITIONAL TAX HOLIDAY TO AILING COAL MINERS - JP
The Jakarta Post, one of the leading English news paper in Indonesia reported that, acknowledging difficulties encountered by coal miners due to a p ...
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- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- The University of Queensland
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Economic Council, Georgia
- Petron Corporation, Philippines
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- ASAPP Information Group - India
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Goldman Sachs - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Price Waterhouse Coopers - Russia
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- Sojitz Corporation - Japan
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Cement Manufacturers Association - India
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Star Paper Mills Limited - India
- Sinarmas Energy and Mining - Indonesia
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Indian Oil Corporation Limited
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
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