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