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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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Tuesday, 04 May 10
DRY BULK MARKET SOFTENING AGAIN ON LACK OF DIRECTION
The dry bulk market has put on the brakes once again, after the last session of the Baltic Dry Index ended at 3,354 points, down 5 from the previous ...
Monday, 03 May 10
AUSTRALIA PLANS 40 PERCENT TAX ON MINING PROFITS - THE JAKARTA POST
The Jakarta Post reported that, Australia would heavily tax the booming profits of its mining companies under a tax system overhaul proposed Sunday ...
Saturday, 01 May 10
THE PERIOD ACTIVITY WAS QUITE FIRM DURING THE WEEK - CAPT. REDDY
COALspot.com: The BDI was up by 11.32 pct which was mainly due to the firmness in capsize index which was up by 21.55 pct .
The other sectors Pan ...
Saturday, 01 May 10
EXPANDED SA COAL TERMINAL TO START OPERATIONS ON MAY 1 - MINING WEEKLY
Mining Weekly reported that, In line with expectations, the Richards Bay Coal Terminal (RBCT) had completed the R1,2-billion Phase V expansion ...
Thursday, 29 April 10
SOUTH AFRICAN ROUNDS BACK TO INDIA SUPRAS CAN ACHIEVE AROUND MID 20S
Handy
Atlantic markets remain firm. Supramaxes open in USG are now achieving low/mid&n ...
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- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Trasteel International SA, Italy
- PTC India Limited - India
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- The Treasury - Australian Government
- Renaissance Capital - South Africa
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Minerals Council of Australia
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- Indian Energy Exchange, India
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Price Waterhouse Coopers - Russia
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- Miang Besar Coal Terminal - Indonesia
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
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