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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, 27 November 18
PANAMAX AND SUPRAMAX INDICES WITNESSED A DECLINE OF JUST BELOW 14% IN THEIR MEAN ON A MONTH-ON-MONTH COMPARISON - ALLIED SHIPPING
A month of sharp corrections and great asymmetries for the dry bulk sector, with the overall overview of the market shipping rapidly from a state o ...
Monday, 26 November 18
SUPRAMAX: THE ASIAN MARKET STALLED THIS WEEK WITH A BUILD-UP OF TONNAGE - BALTIC BRIEFING
Capesize
It was a positive end to the week, with West Australia/China making significant gains and firing owners’ resolve. There was talk ...
Friday, 23 November 18
GOLDEN ENERGY'S POTENTIAL ACQUISITION OF STANMORE CREDIT POSITIVE - FITCH RATINGS
Golden Energy and Resources Limited's (GEAR, B+/Positive) potential acquisition of Stanmore Coal will help the company diversify its coal opera ...
Friday, 23 November 18
ASSOCIATION CALLS FOR REVISION OF DMO SCHEME FOR COAL - JP
The Indonesian Coal Mining Association (APBI) has called on the government to revise the domestic market obligation (DMO) scheme for coal, which re ...
Friday, 23 November 18
INDONESIA'S REVENUES FROM MINERAL AND COAL INCREASE TO US$ 2.858 BILLION - ANTARA
Indonesia`s non-tax state revenues from the mineral and coal sub-sector reached Rp 41.77 trillion (approximately US$ 2.858 Billion) as of Nov 16, 2 ...
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- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Port Waratah Coal Services - Australia
- Vedanta Resources Plc - India
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Anglo American - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Marubeni Corporation - India
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- The Treasury - Australian Government
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Electricity Generating Authority of Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Baramulti Group, Indonesia
- Simpson Spence & Young - Indonesia
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- TeaM Sual Corporation - Philippines
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Altura Mining Limited, Indonesia
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Sojitz Corporation - Japan
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