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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, 01 April 11
DRY BULK MARKET WEAKENS ON SLOWER DEMAND, HOPES FOR MID-TERM REBOUND ON JAPANS RECONSTRUCTION - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market, as reflected in the Baltic Dry Index (BDI) retreated for a third day yesterday, after staying flat on Monday, to end at 1,530 p ...
Wednesday, 30 March 11
CHALLENGER SIGNS OPTION AGREEMENTS TO PURCHASE FOUR COAL PROJECTS IN INDONESIA
Challenger Signs Three Exclusive Option Agreements to Purchase Four Coal Projects in East Kalimantan, Indonesia
Challenger Deep Resources Corp.ha ...
Wednesday, 30 March 11
KPCL TO IMPORT ONE MILLION TONS OF 6300 GAD COAL
COALspot.com - Karnataka Power Corporation a state utility of Karnataka, India called for open tender for supply of one million tons of 6300 Kcal/kg ...
Wednesday, 30 March 11
WIKA GRABS PROJECT FROM ADARO INDONESIA - INSIDER STORIES
One of Indonesia's largest thermal coal PT Adaro Indonesia has finally mandated PT Wijaya Karya Tbk (WIKA) as a contractor to install and manage ov ...
Tuesday, 29 March 11
JAPAN FACTOR RIPPLING THROUGH THE SHIPPING MARKETS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the world watching the latest developments regarding the nuclear crisis in Japan and the devastating effects of the recent tragedy that struck ...
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- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Bhatia International Limited - India
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
- Planning Commission, India
- The University of Queensland
- Thiess Contractors Indonesia
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMC Global Power, Philippines
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Bukit Makmur.PT - Indonesia
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Minerals Council of Australia
- Renaissance Capital - South Africa
- McConnell Dowell - Australia
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Riau Bara Harum - Indonesia
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- Formosa Plastics Group - Taiwan
- Central Electricity Authority - India
- Energy Development Corp, Philippines
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