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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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Friday, 02 July 10
MINERALS RESOURCE TAXATION IN AUSTRALIA - PRESS RELEASE
Press Release : Rio Tinto acknowledges the Australian Government’s announcement that the Resource Super Profits Tax (RSPT) proposal will be re ...
Thursday, 01 July 10
TATA POWER TO RAISE US$300 MILLION THROUGH ITS COAL SPVS TO FUND ADDITIONAL ACQUISITIONS AND / OR REDUCE OUTSTANDING DEBT
Stock Markets Review reported that, Tata Power, India’s largest private power player has signed an agreement to raise US$300 million in Bhira ...
Thursday, 01 July 10
HELLENIC SHIPPING NEWS POLL: THE BDI WILL STAY ABOVE 3,000 POINTS IN THE SECOND HALF OF 2010
When Hellenic Shipping News Worldwide prepared June’s poll asking readers about where do they think that the Baltic Dry Index (BDI) will range ...
Thursday, 01 July 10
PANAMAX MARKETS CONTINUE TO DROP IN ALL BASINS - FEARNLEYS
Handy
Atlantic rates continue to slide with little activity. Supras open in USG get low 30´s to Med and mid 40´s to FEast. Hmax/Supra ...
Wednesday, 30 June 10
PTBA TO SUPPLY ADDITIONAL 180 MLN TONS OF COAL TO PLN FOR 20 YEARS
COALspot.com: Indonesia's state-owned coal mining company PT Tambang Batubara Bukit Asam Tbk (PTBA) has entered into a new contract with state owne ...
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Ceylon Electricity Board - Sri Lanka
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sakthi Sugars Limited - India
- Coastal Gujarat Power Limited - India
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- PTC India Limited - India
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- The University of Queensland
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- SMC Global Power, Philippines
- Aditya Birla Group - India
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Makarim & Taira - Indonesia
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Planning Commission, India
- Wood Mackenzie - Singapore
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Posco Energy - South Korea
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- White Energy Company Limited
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- Minerals Council of Australia
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