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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, 05 March 12
SOUTHGOBI ANNOUNCES AGREEMENT TO SELL ITS THERMAL COAL TSAGAAN TOLGOI DEPOSIT FOR US$ 30 MILLION
SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) announced today an agreement to sell its thermal coal property, the Tsagaan Tolgoi Deposit to Modun Re ...
Monday, 05 March 12
SOME RESOURCE TITANS NOT THRILLED WITH INDONESIAN EXPORT BAN - THE JAKARTA GLOBE
The Jakarta Globe reported that, local representatives of major business associations in East Kalimantan have protested a government regulation that ...
Monday, 05 March 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
An air of optimism poured in the market this week for dry bulk shippers with the Baltic Dry Index recording daily gains during the end of February b ...
Sunday, 04 March 12
SE ASIA WAS FIRM FOR TRIPS TO INDIA AND CHINA - VISTAAR
COALspot.com - This week saw another upward trend with all indices up and generally market was firm.
The BDI was up by 7.38 pct closing at 771 po ...
Friday, 02 March 12
DJMBP HAS ANNOUNCED SECOND BATCH OF CLEAR N CLEAN CERTIFIED MINERS
COALspot.com - The Directorate general of mineral & coal of Indonesia has announced second batch of companies who have passed IUP Clear and Clea ...
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- Videocon Industries ltd - India
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Agrawal Coal Company - India
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Grasim Industreis Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Metalloyd Limited - United Kingdom
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Manunggal Multi Energi - Indonesia
- Madhucon Powers Ltd - India
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Planning Commission, India
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- Latin American Coal - Colombia
- The Treasury - Australian Government
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Binh Thuan Hamico - Vietnam
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
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