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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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Thursday, 12 July 12
SOUTHGOBI RESOURCES ANNOUNCES NOTICE OF INVESTMENT DISPUTE FILED AGAINST MONGOLIAN GOVERNMENT
Press Release - SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) (“SouthGobi”) announced today that SGQ Coal Investment Pte. Ltd., a wholly ...
Wednesday, 11 July 12
HBA DROPPED SHARPLY IN JULY
COALspot.com - Indonesian HBA fell to lowest level since September 2010 in July 2012. The monthly coal reference price for coal sales this mon ...
Wednesday, 11 July 12
SUB-BIT FOB INDONESIA COAL SWAP LOST $ 1.26 PER TON
COALspot.com - Sub-Bit FOB Indonesia Coal decline for a second day yesterday, according to SGX AsiaClear OTC Coal Swaps. The prices for shipments to ...
Tuesday, 10 July 12
DRY BULK MARKET RECORDS MODEST GAINS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market inched a bit higher on Monday, with the Baltic Dry Index (BDI) ending the session up by 5 points to 1,162. Most markets were hig ...
Saturday, 07 July 12
INDONESIA-JAPAN RELATIONS TURN SOUR - THE JAKARTA POST
The Jakarta Post, the one of the leading Indonesian English new papers reported that, Bilateral relations between Indonesia and Japan have recently ...
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- London Commodity Brokers - England
- Georgia Ports Authority, United States
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Bhushan Steel Limited - India
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
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