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