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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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Friday, 18 May 12
EXPORT TAX WILL ERODE PROFITS, INDONESIAN COAL EXEC COMPLAINS - THE JAKARTA GLOBE
The Jakarta Globe reported that, A 20 percent export duty the government has imposed on 14 mineral ore products will not only take a toll on mining ...
Friday, 18 May 12
KOREA EAST WEST POWER LOOKING FOR TOTAL 2.6 MILLION TONS OF 4600 NAR COAL AT FIXED PRICE FOR 5 YEARS
COALspot.com - Korea East West Power Co., Ltd is inviting bids to supply of 520,000 Metric Tons (per annum) of minimum 4,600 kcal/kg coal of N ...
Friday, 18 May 12
NICKEL ORE CARGOES ARE NOT SEEN IN MARKET ANYMORE DUE TO ON-GOING INDONESIAN BAN - FEARNLEYS AS
Handy
The market remained variable.
Fronthaul voyages both from Baltic and Black Sea paid over USD 18k/day. From USG to Cont tonnage would get ...
Thursday, 17 May 12
COAL MINERS OPPOSE EXPORT TAX, SUGGEST OUTPUT QUOTA - THE JAKARTA POST
The Jakarta Post reported that, coal miners have suggested that the government apply a production quota instead of implementing an export tax in ord ...
Thursday, 17 May 12
DRY BULK MARKET STILL LOOKING FOR NEW DIRECTION - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept on moving sideways during this week, with the mixed performance across all segments. Yesterday, the industry’s be ...
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- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Power Finance Corporation Ltd., India
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Australian Coal Association
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Economic Council, Georgia
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Coal and Oil Company - UAE
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Wilmar Investment Holdings
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- VISA Power Limited - India
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Tamil Nadu electricity Board
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Renaissance Capital - South Africa
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
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