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