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