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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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Saturday, 11 July 09
THE IMPORT OF STEAM COAL FROM INDONESIA & S/A TO INDIA WILL CONTINUE TO INCREASE - VISTAAR
COALspot.com ( Singapore): Vistaar Shipping, an experienced ship operator in Singapore said, The market continued to be soft this with doubts a ...
Friday, 10 July 09
DMO AND ICPR AIMED AT SECURING DOMESTIC COAL SUPPLY
COALspot.com (Indonesia): According to website of DGCMG, the implementation of coal Domestic Market Obligation (DMO) and the Indonesian Coal P ...
Friday, 10 July 09
INDONESIAN MINING LAW IN TRANSITION
Further to the enactment of Law No. 4 of 2009 on Mineral and Coal Mining (“Law 4/2009”), the enactment of various implementing regulatio ...
Thursday, 09 July 09
COAL EXPORTS TO CHINA MAY FALL AS PRICES, SHIPPING RATES RISE
CHINA'S appetite for Australian coal may fall in July and August from earlier highs, due to a recent recovery in regional prices and higher interna ...
Thursday, 09 July 09
GARDA LISTS SHARES IN LOCAL BOURSE
Local coal company PT Garda Tujuh Buana officially listed its shares in the Indonesia Stock Exchange (IDX).
The listing followed the company's p ...
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- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Larsen & Toubro Limited - India
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- MS Steel International - UAE
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Baramulti Group, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Coal Blending Company Limited - Australia
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Sakthi Sugars Limited - India
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- Power Finance Corporation Ltd., India
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- McConnell Dowell - Australia
- The University of Queensland
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Agrawal Coal Company - India
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Economic Council, Georgia
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- Mercuria Energy - Indonesia
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- ICICI Bank Limited - India
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
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