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