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