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