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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, 23 June 10
WILHELMSEN SHIPS SERVICE OPENS NEW OFFICE IN KRISHNAPATNAM PORT INDIA
Wilhelmsen Ships Service has opened a branch office in Krishnapatnam port on the east coast of India according to statement released by company ...
Wednesday, 23 June 10
PTC'S INDONESIAN COAL-MINING FORAY-I: TO INVEST USD 69 MILLION VIA OVERSEAS SPV
Moving ahead with its plans to acquire coal assets abroad, the power trading major, PTC India Limited, has decided to invest a total of USD 69 milli ...
Tuesday, 22 June 10
INDIA HAS REPORTED MORE COAL IMPORTS FROM COLOMBIA
A second consecutive week of sharp corrections for the dry bulk market, although some of the softness could be attributed to Chinese holidays at the ...
Monday, 21 June 10
THE SUPRAMAX INDEX IN THE FAR-EAST (S6 ROUTE) WAS DOWN BY $ 1300 PER DAY - VISTAAR
COALspot.com: The market continued to soften in all sectors last week also with the BDI dropping by 18.07 pct and Cape index by 26.71 pct.
The BD ...
Sunday, 20 June 10
OUR COAL: ITS DEVELOPMENT AND CONTROVERSIAL ISSUES
Indonesia’s production of coal has been growing amazingly. In the mid 1980s, national coal production was less than 1 million tons per annum, ...
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- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement - Thailand
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- The Treasury - Australian Government
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Economic Council, Georgia
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- Ministry of Mines - Canada
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- San Jose City I Power Corp, Philippines
- Kobexindo Tractors - Indoneisa
- London Commodity Brokers - England
- PTC India Limited - India
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- New Zealand Coal & Carbon
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- Uttam Galva Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Lanco Infratech Ltd - India
- Australian Coal Association
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- Planning Commission, India
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- Central Electricity Authority - India
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Bulk Trading Sa - Switzerland
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Sakthi Sugars Limited - India
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
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