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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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Friday, 04 September 15
GOVERNORS WILL HAVE THE POWER TO REVOKE MINERS' PERMITS: ENERGY MINISTRY - JG
Starting Oct. 1, Indonesia's governors will lawfully become "executors" in revoking the licenses of miners that fail to secure a &quo ...
Thursday, 03 September 15
MINISTRY OF ENERGY AND MINERAL RESOURCES OF INDONESIA TO REVISE HBA METHODOLOGY
COALspot.com: Ministry of Energy and Mineral Resources (ESDM) in process to revise Indonesian Coal Price Reference (HBA) and expected to complete b ...
Thursday, 03 September 15
THE CHINESE STOCK MARKET AND THE CHINESE ECONOMY CONTINUE TO SUBSTANTIALLY AFFECT TRADING - INTERMODAL
The last week of the summer season saw the BDI dipping further on the back of another significant drop in rates for Capes, which brought the market ...
Wednesday, 02 September 15
PORT OF NEWCASTLE SHIPPED 13.46 MMT OF COAL IN JULY; UP 0.66 PER CENT M-O-M
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.224 billi ...
Wednesday, 02 September 15
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS
In the beginning of the summer period SnP activity was firm with numerous buyers, coming mainly from Greece and the Far East, inspecting ships and ...
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- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Trasteel International SA, Italy
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Jorong Barutama Greston.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Australian Coal Association
- ICICI Bank Limited - India
- Planning Commission, India
- Central Java Power - Indonesia
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- Cigading International Bulk Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Energy Link Ltd, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Georgia Ports Authority, United States
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
- Petrochimia International Co. Ltd.- Taiwan
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Sarangani Energy Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
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