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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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Saturday, 22 February 14
POTEN RAISES THE QUESTION OF ACCURACY IN CALCULATING TANKER FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the tanker market has grown in complexity over the course of the past few years, the question of whether the traditional methods of assessing rat ...
Friday, 21 February 14
INDONESIA PLAN TO CAP COAL OUTPUT AND HIKE ROYALTY; START MUSIC
COALspot.com: Energy and Mineral Resources Ministy of Indonesia is planning to increase the royalty for coal miners particularly for Mining Business ...
Friday, 21 February 14
THE WORLD'S SECOND LARGEST COAL MINER MINED 19.2 MMST OF COAL IN A WEEK, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, mined approximately 19.2 million short tons (mmst) of coal in a w ...
Friday, 21 February 14
DRY BULK MARKET SHOWS SIGNS OF LIFE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has slowly started to emerge from the downfall it's been since the start of the year, as rates have began to pick up over the c ...
Friday, 21 February 14
INDONESIA COAL OUTPUT CAP TO HURT MINERS RELIANT ON VOLUME GROWTH, FITCH SAYS
Fitch Ratings says that the credit profiles of mining sub-contractors and miners highly reliant on increasing volumes to support high debt servicing w ...
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- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Minerals Council of Australia
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- Heidelberg Cement - Germany
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
- VISA Power Limited - India
- Economic Council, Georgia
- Chamber of Mines of South Africa
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- Metalloyd Limited - United Kingdom
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- Planning Commission, India
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Parliament of New Zealand
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- GVK Power & Infra Limited - India
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
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