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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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Monday, 13 January 14
INDONESIAN ORE BAN TO HAVE LIMITED IMPACT ON CHINESE ALUMINIUM PRODUCERS, FITCH RATINGS SAYS
COALspot.com: Fitch Ratings says today that Indonesia's ban on exports of unprocessed mineral ore will have limited impact on Chinese aluminium pro ...
Sunday, 12 January 14
THE FREIGHT MARKET CONTINUE TO REMAIN WEAK NEXT WEEK - SOLYM CARRIERS
Wish You A very Happy New Year
COALspot.com: The market has dropped quite a lot as expected due to holidays and probably also the effect of ban o ...
Friday, 10 January 14
DECISION ON ORE EXPORT BAN WILL BE MADE TOMORROW: INDUSTRY MINISTER, JG SAYS
Industry Minister M.S. Hidayat dismissed reports on Thursday that the government had made a decision on the matter. “We will only make a decis ...
Friday, 10 January 14
US COAL PRODUCTION UP 5.8% ON WEEK IN WEEK ENDED SATURDAY 4 JANUARY
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.8 million short tons (mmst) of coal in ...
Thursday, 09 January 14
THE INDONESIAN GOVERNMENT EASES ORE EXPORT BAN
COALspot.com: The Indonesian government has finally agreed to ease the ore-export ban just a few days before the Sunday deadline amid protests from ...
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- Singapore Mercantile Exchange
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Latin American Coal - Colombia
- Trasteel International SA, Italy
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Cement Manufacturers Association - India
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- Sarangani Energy Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Australian Coal Association
- Eastern Coal Council - USA
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- Energy Link Ltd, New Zealand
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Central Electricity Authority - India
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Larsen & Toubro Limited - India
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
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