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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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Wednesday, 18 April 12
INDONESIA TO INTRODUCE EXPORT DUTY ON MINERAL ORES BY 6 MAY 2012
The Indonesian government is scheduled to issue regulation on export duty for minerals before May 6, 2012.
According to Bisnis Indonesia, as quot ...
Sunday, 15 April 12
THE SPOT FIXTURE RATES FOR SUPRAMAX IN SE ASIA SAW SOME SOFTENING OF CHARTER RATES - VISTAAR
COALspot.com - The market seem to be holding and except for Supramax and handy size index all other index was up with BDI up by 4.74 pct closing at ...
Friday, 13 April 12
MINERS OPPOSE GOVTS EXPORT TAX PLAN - THE JAKARTA POST
The Jakarta Post reported that, Indonesian mining companies have strongly protested the government’s plan to impose a 25 percent export tax on ...
Friday, 13 April 12
S&P CAUTIONS AGAINST NEW INDONESIAN MINING REGULATIONS - THE JAKARTA GLOBE
The Jakarta Globe reported that, Investors may have expressed concerns about looming new mining regulations, but ratings agency Standard & Poor& ...
Thursday, 12 April 12
FIRST QUARTER OF 2012 SAW AN ADDITIONAL 24.2 MILLION DWT OF DRY BULK CARRIERS ENTERING THE FLEET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The inflow of newbuilt dry bulk vessels was larger than expected in the first quarter of 2012. As much as 24.2 million DWT were added to the fleet. ...
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- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
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- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
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- Global Business Power Corporation, Philippines
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- Tamil Nadu electricity Board
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- Ministry of Finance - Indonesia
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- Indo Tambangraya Megah - Indonesia
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- Renaissance Capital - South Africa
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- Minerals Council of Australia
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- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Indian Energy Exchange, India
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- Australian Coal Association
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- SMC Global Power, Philippines
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- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- White Energy Company Limited
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- Eastern Coal Council - USA
- GMR Energy Limited - India
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
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- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
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- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- VISA Power Limited - India
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
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- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
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- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
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- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
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- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- Medco Energi Mining Internasional
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- Madhucon Powers Ltd - India
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- Economic Council, Georgia
- Siam City Cement - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- ASAPP Information Group - India
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
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- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- The University of Queensland
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- OPG Power Generation Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- ICICI Bank Limited - India
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- Sree Jayajothi Cements Limited - India
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
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- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
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- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
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- Simpson Spence & Young - Indonesia
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