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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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Sunday, 16 September 12
GLOBAL LOW DEMAND ; INDONESIA COAL AND CFR SOUTH CHINA COAL SWAPS DIP
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for November 2012 delivery lost 1.345 percent W-O-W on Friday, 14 September 2012, closing but gai ...
Sunday, 16 September 12
THE FREIGHT RATES FROM INDONESIA TO INDIA EXPECTED TO BE STEADY - VISTAAR
COALspot.com - The freight market was mixed with most indices closing positive except for the Panamax index.
The main sentiment seems to be ...
Saturday, 15 September 12
FINANCE MINISTRY OPPOSES TAX INCENTIVE PLAN FOR COAL MINERS - JP
The Jakarta Post reported that, the Finance Ministry has turned down the idea of providing a fiscal incentive to the country’s coal mining ind ...
Friday, 14 September 12
DRY BULK MARKET LOOKS TOWARDS CHINA FOR SOME POSITIVE NEWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the dry bulk market freight rates submerged underwater for a large part of the year, dry bulk owners are looking for some positive enhancement ...
Friday, 14 September 12
GOVT OFFERS CONDITIONAL TAX HOLIDAY TO AILING COAL MINERS - JP
The Jakarta Post, one of the leading English news paper in Indonesia reported that, acknowledging difficulties encountered by coal miners due to a p ...
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- Kohat Cement Company Ltd. - Pakistan
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- Oldendorff Carriers - Singapore
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- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
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- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
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- Videocon Industries ltd - India
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- Parry Sugars Refinery, India
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- MS Steel International - UAE
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- Sakthi Sugars Limited - India
- Leighton Contractors Pty Ltd - Australia
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- TeaM Sual Corporation - Philippines
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
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- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
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- Karbindo Abesyapradhi - Indoneisa
- Marubeni Corporation - India
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
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- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
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- Riau Bara Harum - Indonesia
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- Holcim Trading Pte Ltd - Singapore
- Bhushan Steel Limited - India
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- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Miang Besar Coal Terminal - Indonesia
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Tamil Nadu electricity Board
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Parliament of New Zealand
- Directorate Of Revenue Intelligence - India
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- The University of Queensland
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- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Semirara Mining and Power Corporation, Philippines
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Ministry of Finance - Indonesia
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
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- Bahari Cakrawala Sebuku - Indonesia
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- Bhoruka Overseas - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
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