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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, 31 December 12
"DISTRESSED", "ECO" AND "FINANCE" ARE THE THREE WORDS WHICH CHARACTERIZED 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2012 was yet another year of speculation, anticipation, pessimism and more speculation in the shipping markets. According to the latest weekly repor ...
Saturday, 29 December 12
SHIPBREAKING YARDS IN INDIA DEMOLISH A TOTAL OF 527 VESSELS IN 2012, BREAKING ALL PREVIOUS RECORDS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
India's ship demolition experts of Star Matrix contemplated this week on the issue of why ships in the range of 1,000 and up to 6,500 liquid tons ( ...
Thursday, 27 December 12
A LOOK AT WORLD TRADE PATTERNS DURING 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
While China's leaders are likely to stick with the 2012 economic growth rate of 7.5% when they chart a course for 2013 - its weakest pace since 199 ...
Thursday, 27 December 12
INDONESIA SHIPPED 33.578* MMT COAL IN NOVEMBER
COALspot.com: Indonesia, the world largest multi grade coal exporter has shipped 33.578* million tons of coal in November 2012. thi ...
Wednesday, 26 December 12
UPDATE ON EXPORT BAN ON RAW MINERALS AND ORE - RITA SUSANTO
COALspot.com - In May 2012, the Minister of Energy and Mineral Resources (“MoEMR”) in Regulation No.7 (“Reg-7”, amended by R ...
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- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Mercuria Energy - Indonesia
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- Bayan Resources Tbk. - Indonesia
- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Eastern Energy - Thailand
- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- LBH Netherlands Bv - Netherlands
- Mercator Lines Limited - India
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Antam Resourcindo - Indonesia
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- ASAPP Information Group - India
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- PTC India Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
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