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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 October 10
COAL TRADERS POWER FOREIGN ASSET BUYS - ECONOMIC TIMES
Economic Times reported that, the rush to own coal assets is leading to innovative alliances. are teaming up with utilities like , Reliance Power an ...
Thursday, 30 September 10
LOW CALORIFIC VALUE COAL MAY BE SOLD BELOW COAL REFERENCE PRICE IN INDONESIA
COALspot.com: Indonesia, the world’s largest coal exporter has issued another ministerial decree to regulate the selling price of coal of Indo ...
Thursday, 30 September 10
INITIAL PHASE OF MOATIZE MINING BY EARLY NOVEMBER - ALL AFRICA
All Africa report that, the initial phase of mining coal at Moatize, in the western Mozambican province of Tete, will begin by early November, and t ...
Thursday, 30 September 10
THE PANAMAX CONTINUED ITS DOWNWARD TREND FROM LAST WEEK - FEARNBULK
HANDY
Activity remains slow this week combined with a lack of fresh enquiry and tonnage over-supply in the Atlantic. Indexes are all negative exce ...
Thursday, 30 September 10
INDONESIAN COAL FOR POWER PLANT - LANKA GAZETTE
Lanka Gazette reported that, A cargo vessel with coal on board to generate electricity for the Norochcholai Coal Power Plant will arrive in Sri Lank ...
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- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Mjunction Services Limited - India
- Economic Council, Georgia
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Central Electricity Authority - India
- Bukit Asam (Persero) Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Star Paper Mills Limited - India
- The University of Queensland
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- PTC India Limited - India
- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Intertek Mineral Services - Indonesia
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Videocon Industries ltd - India
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- South Luzon Thermal Energy Corporation
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
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