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