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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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Thursday, 03 March 16
BDI FURTHER STRENGTHENING; THE INCREASE IN RATES WAS NOT SUBSTANTIAL
COALspot.com: The BDI closed off on a positive note for a second week in a row, further strengthening the belief that the market might be bottoming ...
Thursday, 03 March 16
RIO TINTO COMPLETES SALE OF INTEREST IN BENGALLA JOINT VENTURE FOR US$616.7 MILLION
COALspot.com: Rio Tinto has completed the sale of its 40 per cent interest in the Bengalla coal Joint Venture in Australia to New Hope Corporation ...
Wednesday, 02 March 16
RE-EVALUATION OF MINING LICENSES CLEAN AND CLEAR STATUS IN INDONESIA
COALspot.com: In connection with the transfer of mining authority from Regents/Mayors to Governors1 and from Regents/Mayors and Governors to t ...
Wednesday, 02 March 16
OIL MY GOD.....!!!!
OIL my GOD….!!!!
The oil price “crash” that started in 2014 was caused by a glut of practically unwanted oil. Producers had be ...
Tuesday, 01 March 16
CS 42 (4200 GAR) COAL INDEX CLOSED AT US$ 27.11 A TON ON 26 FEBRUARY
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline 0.31 percent week over week to averaging $38.77 per ton on this past Friday, ...
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- Karbindo Abesyapradhi - Indoneisa
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Kapuas Tunggal Persada - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- The University of Queensland
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- Ind-Barath Power Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- Planning Commission, India
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Bangladesh Power Developement Board
- Meralco Power Generation, Philippines
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Kalimantan Lumbung Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Malabar Cements Ltd - India
- Minerals Council of Australia
- Pendopo Energi Batubara - Indonesia
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- Bulk Trading Sa - Switzerland
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- White Energy Company Limited
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Riau Bara Harum - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- Economic Council, Georgia
- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- PTC India Limited - India
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Australian Coal Association
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Asmin Koalindo Tuhup - Indonesia
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