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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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Wednesday, 14 December 16
INTERNATIONAL TRIBUNAL DISMISSED CHURCHILL MINING'S DAMAGES CLAIM AGAINST REPUBLIC OF INDONESIA
The Directors of Churchill Mining plc advise that, the ICSID Tribunal (“Tribunal”) granted Indonesia’s application to dismiss the ...
Wednesday, 14 December 16
20/20 VISION! - JOHN N. COTZIAS
2020; A year that could be changing shipping. In early November, the International Maritime Organization (IMO) announced that it would set a 0.5% s ...
Tuesday, 13 December 16
THE FREIGHT MARKET MAY WELL BE SHOWING SIGNS OF HEADING FOR ITS DOWNWARD CORRECTIVE PHASE - ALLIED
2016 has been a tough market for dry bulkers and through these difficult earnings, we have seen some of the lowest prices being noted historically ...
Tuesday, 13 December 16
COAL DEMAND GROWTH TO STALL AS APPETITE WANES, ACCORDING TO IEA
Growth in global coal demand will stall over the next five years as the appetite for the fuel wanes and other energy sources gain ground, according ...
Monday, 12 December 16
U.S. WEEKLY COAL PRODUCTION TOTALS 16.3 MMST, UP 7.4% - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.3 million short ton ...
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- Mercuria Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- Central Electricity Authority - India
- Bhatia International Limited - India
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Bukit Makmur.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Kobexindo Tractors - Indoneisa
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Marubeni Corporation - India
- Independent Power Producers Association of India
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Indian Energy Exchange, India
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Cigading International Bulk Terminal - Indonesia
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Kartika Selabumi Mining - Indonesia
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Tata Chemicals Ltd - India
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- Central Java Power - Indonesia
- Siam City Cement - Thailand
- Australian Coal Association
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
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