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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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Monday, 05 March 12
SOUTHGOBI ANNOUNCES AGREEMENT TO SELL ITS THERMAL COAL TSAGAAN TOLGOI DEPOSIT FOR US$ 30 MILLION
SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) announced today an agreement to sell its thermal coal property, the Tsagaan Tolgoi Deposit to Modun Re ...
Monday, 05 March 12
SOME RESOURCE TITANS NOT THRILLED WITH INDONESIAN EXPORT BAN - THE JAKARTA GLOBE
The Jakarta Globe reported that, local representatives of major business associations in East Kalimantan have protested a government regulation that ...
Monday, 05 March 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
An air of optimism poured in the market this week for dry bulk shippers with the Baltic Dry Index recording daily gains during the end of February b ...
Sunday, 04 March 12
SE ASIA WAS FIRM FOR TRIPS TO INDIA AND CHINA - VISTAAR
COALspot.com - This week saw another upward trend with all indices up and generally market was firm.
The BDI was up by 7.38 pct closing at 771 po ...
Friday, 02 March 12
DJMBP HAS ANNOUNCED SECOND BATCH OF CLEAR N CLEAN CERTIFIED MINERS
COALspot.com - The Directorate general of mineral & coal of Indonesia has announced second batch of companies who have passed IUP Clear and Clea ...
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- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- Posco Energy - South Korea
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Economic Council, Georgia
- Karaikal Port Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Larsen & Toubro Limited - India
- Eastern Energy - Thailand
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- Heidelberg Cement - Germany
- Indo Tambangraya Megah - Indonesia
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Bhatia International Limited - India
- Anglo American - United Kingdom
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
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