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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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Wednesday, 15 February 12
HBA FOR FEB 2012, CLIMBS 2.09 PERCENT AND REACHED US$ 111.58 PER TON
COALspot.com - The Indonesian coal reference price for February climbs 2.09 percent to US$111.58 per ton after losing past three months. ...
Monday, 13 February 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
The current sentiment in the dry market resembles memories from the end of 2008, when the Baltic Dry Index closed at the level of 663 points on Dece ...
Sunday, 12 February 12
INDONESIA HAS ISSUED A REGULATION TO BAN THE EXPORT OF UNPROCESSED MINERALS AND METALS BY 2014
COALspot.com - The Indonesian government has finally issued a ministerial decree (7 Year 2012 dated 6 February 2012) to ban the export of unpro ...
Sunday, 12 February 12
THE BALTIC DRY INDEX CLIMBS 10.51%
COALspot.com - "The markets touched record lows not seen since mid 80’s. However there was some good news with signs of market recovery a ...
Saturday, 11 February 12
A SNAPSHOT ON THE ECONOMIC AND SHIPPING ENVIRONMENT - GOLDEN DESTINY
The week was highlighted with intense worries in the eurozone for Greece to secure its second bailout of $130billion by applying a ...
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- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- ICICI Bank Limited - India
- Parliament of New Zealand
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- Economic Council, Georgia
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- India Bulls Power Limited - India
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Jorong Barutama Greston.PT - Indonesia
- White Energy Company Limited
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- Larsen & Toubro Limited - India
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- Trasteel International SA, Italy
- CNBM International Corporation - China
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- VISA Power Limited - India
- Planning Commission, India
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Anglo American - United Kingdom
- Bhushan Steel Limited - India
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Karbindo Abesyapradhi - Indoneisa
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