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