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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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- Rashtriya Ispat Nigam Limited - India
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- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
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- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
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- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
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- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
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- Indian Oil Corporation Limited
- Goldman Sachs - Singapore
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- Global Coal Blending Company Limited - Australia
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- Merrill Lynch Commodities Europe
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- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
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- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
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- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- Parliament of New Zealand
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- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
- Economic Council, Georgia
- Australian Coal Association
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- The University of Queensland
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aditya Birla Group - India
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- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- Anglo American - United Kingdom
- Toyota Tsusho Corporation, Japan
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
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