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