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