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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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Friday, 06 April 12
DRY BULK MARKET SWIFT TO HALT FALL ON RENEWED DEMAND FOR CAPESIZES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk managed to put a stop to the recent falls, which came as a result of a lacklustre demand for smaller vessel sizes. Although this trend ...
Thursday, 05 April 12
COAL EXPORT TAX: MATTER OF CONCERN FOR INDIA - SUNIL K KUMBHAT
COALspot.com - Since the issuance of Indonesian Mining law in 2009, miners have increased their activities in exploring , ex ...
Thursday, 05 April 12
AKR COAL FIRST EXPORT SHIPMENT OF COAL SEABORNE
PT Anugrah Karya Raya (AKR Coal) subsidiary of PT AKR Corporindo Tbk., Indonesia’s leading integrated supply chain solutions provider and larg ...
Thursday, 05 April 12
DRY BULK MARKET STALLS AS TREND IS REVERSED - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has halted its month-long rally, with the BDI (Baltic Dry Index) retreating yesterday for a second consecutive session. Industry ...
Wednesday, 04 April 12
OIL MAY JUMP TO $150PB IF IRAN ATTACKED: EXPERT - KUNA / HELLENIC SHIPPING
Prices of oil will not drop below level of $100 per barrel and may jump to $150 pb in the coming two months, according to the prominent Kuwaiti expe ...
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- Kobexindo Tractors - Indoneisa
- Marubeni Corporation - India
- Australian Coal Association
- Tata Chemicals Ltd - India
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Formosa Plastics Group - Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Price Waterhouse Coopers - Russia
- TNB Fuel Sdn Bhd - Malaysia
- Aditya Birla Group - India
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Savvy Resources Ltd - HongKong
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Ceylon Electricity Board - Sri Lanka
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Dalmia Cement Bharat India
- Banpu Public Company Limited - Thailand
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Kepco SPC Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- Meenaskhi Energy Private Limited - India
- Simpson Spence & Young - Indonesia
- Bhatia International Limited - India
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- Semirara Mining Corp, Philippines
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Oldendorff Carriers - Singapore
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
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