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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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Wednesday, 18 April 12
INDONESIA TO INTRODUCE EXPORT DUTY ON MINERAL ORES BY 6 MAY 2012
The Indonesian government is scheduled to issue regulation on export duty for minerals before May 6, 2012.
According to Bisnis Indonesia, as quot ...
Sunday, 15 April 12
THE SPOT FIXTURE RATES FOR SUPRAMAX IN SE ASIA SAW SOME SOFTENING OF CHARTER RATES - VISTAAR
COALspot.com - The market seem to be holding and except for Supramax and handy size index all other index was up with BDI up by 4.74 pct closing at ...
Friday, 13 April 12
MINERS OPPOSE GOVTS EXPORT TAX PLAN - THE JAKARTA POST
The Jakarta Post reported that, Indonesian mining companies have strongly protested the government’s plan to impose a 25 percent export tax on ...
Friday, 13 April 12
S&P CAUTIONS AGAINST NEW INDONESIAN MINING REGULATIONS - THE JAKARTA GLOBE
The Jakarta Globe reported that, Investors may have expressed concerns about looming new mining regulations, but ratings agency Standard & Poor& ...
Thursday, 12 April 12
FIRST QUARTER OF 2012 SAW AN ADDITIONAL 24.2 MILLION DWT OF DRY BULK CARRIERS ENTERING THE FLEET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The inflow of newbuilt dry bulk vessels was larger than expected in the first quarter of 2012. As much as 24.2 million DWT were added to the fleet. ...
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- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- ICICI Bank Limited - India
- Bhatia International Limited - India
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Minerals Council of Australia
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
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- PetroVietnam Power Coal Import and Supply Company
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- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Ambuja Cements Ltd - India
- Xindia Steels Limited - India
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- The University of Queensland
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- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- London Commodity Brokers - England
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- PTC India Limited - India
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Renaissance Capital - South Africa
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Kobexindo Tractors - Indoneisa
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
- Mjunction Services Limited - India
- CNBM International Corporation - China
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