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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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Tuesday, 09 March 10
STRONG REBOUND IN ALL THE DRY BULK SEGMENTS THIS WEEK
There was a strong rebound in all the dry bulk segments this week, leading to an 18% jump in the Baltic Dry Index.
The Cape and Panamax markets s ...
Tuesday, 09 March 10
L&T POWER EYEING COAL MINES IN AUS, INDONESIA
L&T Power Development Company, a part of the Larsen & Tubro Group, plans to acquire coal mines in Australia and Indonesia, a top company off ...
Tuesday, 09 March 10
BHP AGREES SHORTER-TERM COAL DEALS WITH EUROPEAN, ASIAN CUSTOMERS
Diversified miner BHP Billiton on Monday reported that it had reached sales terms for a significant portion of its hard coking coal volumes for 2010 ...
Monday, 08 March 10
KPCL TO IMPORT 0.9 MILLION TON OF 6000 GCV COAL
COALspot.com: India's Karnataka Power Corporation Ltd is seeking to import 0.9 million metric tons of 6000 kcal/kg (adb) Gross Calorific Value stea ...
Monday, 08 March 10
CHINA SHIPPING TO CARRY MORE COAL FOR SHENHUA
Hellenic Shipping News reported that, China Shipping (Group) Company will expect to ship 40 million tons of coal for Shenhua Group in 2010, Li Shaod ...
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- Bharathi Cement Corporation - India
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Vizag Seaport Private Limited - India
- Energy Development Corp, Philippines
- ICICI Bank Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- Indonesian Coal Mining Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Antam Resourcindo - Indonesia
- The University of Queensland
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Trasteel International SA, Italy
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- Baramulti Group, Indonesia
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
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