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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, 15 February 12
HBA FOR FEB 2012, CLIMBS 2.09 PERCENT AND REACHED US$ 111.58 PER TON
COALspot.com - The Indonesian coal reference price for February climbs 2.09 percent to US$111.58 per ton after losing past three months. ...
Monday, 13 February 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
The current sentiment in the dry market resembles memories from the end of 2008, when the Baltic Dry Index closed at the level of 663 points on Dece ...
Sunday, 12 February 12
INDONESIA HAS ISSUED A REGULATION TO BAN THE EXPORT OF UNPROCESSED MINERALS AND METALS BY 2014
COALspot.com - The Indonesian government has finally issued a ministerial decree (7 Year 2012 dated 6 February 2012) to ban the export of unpro ...
Sunday, 12 February 12
THE BALTIC DRY INDEX CLIMBS 10.51%
COALspot.com - "The markets touched record lows not seen since mid 80’s. However there was some good news with signs of market recovery a ...
Saturday, 11 February 12
A SNAPSHOT ON THE ECONOMIC AND SHIPPING ENVIRONMENT - GOLDEN DESTINY
The week was highlighted with intense worries in the eurozone for Greece to secure its second bailout of $130billion by applying a ...
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- Krishnapatnam Port Company Ltd. - India
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- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
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- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
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- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
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- Karbindo Abesyapradhi - Indoneisa
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
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- Parry Sugars Refinery, India
- IHS Mccloskey Coal Group - USA
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- Global Business Power Corporation, Philippines
- Commonwealth Bank - Australia
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- Orica Australia Pty. Ltd.
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- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
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- Indogreen Group - Indonesia
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- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
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- Minerals Council of Australia
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- White Energy Company Limited
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- Bukit Asam (Persero) Tbk - Indonesia
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- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- LBH Netherlands Bv - Netherlands
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- Banpu Public Company Limited - Thailand
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- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
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- ASAPP Information Group - India
- Bangladesh Power Developement Board
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- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
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- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Ministry of Transport, Egypt
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- Central Electricity Authority - India
- Videocon Industries ltd - India
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- Larsen & Toubro Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- Ambuja Cements Ltd - India
- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Planning Commission, India
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Salva Resources Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Economic Council, Georgia
- The University of Queensland
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Anglo American - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- GVK Power & Infra Limited - India
- PTC India Limited - India
- Kideco Jaya Agung - Indonesia
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- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
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