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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, 06 April 12
DRY BULK MARKET SWIFT TO HALT FALL ON RENEWED DEMAND FOR CAPESIZES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk managed to put a stop to the recent falls, which came as a result of a lacklustre demand for smaller vessel sizes. Although this trend ...
Thursday, 05 April 12
COAL EXPORT TAX: MATTER OF CONCERN FOR INDIA - SUNIL K KUMBHAT
COALspot.com - Since the issuance of Indonesian Mining law in 2009, miners have increased their activities in exploring , ex ...
Thursday, 05 April 12
AKR COAL FIRST EXPORT SHIPMENT OF COAL SEABORNE
PT Anugrah Karya Raya (AKR Coal) subsidiary of PT AKR Corporindo Tbk., Indonesia’s leading integrated supply chain solutions provider and larg ...
Thursday, 05 April 12
DRY BULK MARKET STALLS AS TREND IS REVERSED - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has halted its month-long rally, with the BDI (Baltic Dry Index) retreating yesterday for a second consecutive session. Industry ...
Wednesday, 04 April 12
OIL MAY JUMP TO $150PB IF IRAN ATTACKED: EXPERT - KUNA / HELLENIC SHIPPING
Prices of oil will not drop below level of $100 per barrel and may jump to $150 pb in the coming two months, according to the prominent Kuwaiti expe ...
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- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- White Energy Company Limited
- Mercator Lines Limited - India
- Baramulti Group, Indonesia
- Indo Tambangraya Megah - Indonesia
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- Independent Power Producers Association of India
- PTC India Limited - India
- Agrawal Coal Company - India
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Australian Coal Association
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Link Ltd, New Zealand
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- Mjunction Services Limited - India
- Gujarat Sidhee Cement - India
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Anglo American - United Kingdom
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Commonwealth Bank - Australia
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
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