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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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Monday, 14 December 09
SOUTH AFRICAN STEAM COAL PRICES FIRMING UP FOR Q1 TRADE
Reuters reported that Q1 South African coal prices firmed again slightly largely on Asian demand but European delivered prices were little changed.
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Sunday, 13 December 09
THE FREIGHT MARKET SEEMS TO BE COMING OFF A BIT AND THE MARKET MAY BE SOFT NEXT WEEK - CAPT. REDDY
COALspot.com (Singapore): "The market softened this week especially in the Cape and Panamax segment , where as the Supramax and Handy size was ...
Sunday, 13 December 09
NAPOCOR CUTS COAL IMPORT PROJECTION FOR 2010
STATE-RUN National Power Corp. slashed its planned coal importation for 2010 to only 200,000 metric tons from 3.4 million MT this year, as the gover ...
Sunday, 13 December 09
CHINESE BUYERS SEEK LARGE TONNAGE OF SOUTH AFRICA STEAM COAL
Reuters reported that Chinese utilities on the coast and inland are seeking several cape cargoes each of South African coal for 2010 delivery becaus ...
Saturday, 12 December 09
QUEENSLAND APPROVES A$4 BILLION COAL TERMINAL PROJECT
Queensland’s state government said it has signed a mandate approving development of the A$4 billion ($3.7 billion) Wiggins Island coal termina ...
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- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- PowerSource Philippines DevCo
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Bukit Makmur.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Australian Coal Association
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Agrawal Coal Company - India
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Romanian Commodities Exchange
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Anglo American - United Kingdom
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Ministry of Mines - Canada
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- White Energy Company Limited
- VISA Power Limited - India
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mjunction Services Limited - India
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Planning Commission, India
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
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