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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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Thursday, 27 October 16
PANAMAX: FIRM ATLANTIC; TOPPISH PACIFIC - FEARNLEYS
Supramax
The trend from last week is passed on. ECSA still strong with Supras from N Brazil to Med fixed at $9,000 to $9,500 daily.
Accordin ...
Wednesday, 26 October 16
SHIPPING MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
If the finale of a thriller movie finds the leading actor successfully surviving after all the sacrifices he has made, the audience presumes this t ...
Tuesday, 25 October 16
INDONESIAN COAL PRICES MARCH HIGHER CONTINUES
COALspot.com: A rally in thermal coal prices over the past few months, after years of decline, is still continuing and it is expected to rally at l ...
Tuesday, 25 October 16
THINGS ARE SLOWLY STARTING TO IMPROVE AS CORRECTIONS ARE MADE - ALLIED
It seems as though left, right and centre, all we see nowadays is the word “restructuring”.
There is restructuring amongst bankers ...
Monday, 24 October 16
KOMIPO INVITES BIDS FOR 0.78 MILLION TONS OF BITUMINOUS COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 780,000 Metric Tons of Bituminous Coal for its B ...
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- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- Global Coal Blending Company Limited - Australia
- New Zealand Coal & Carbon
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Interocean Group of Companies - India
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Trasteel International SA, Italy
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Cement Manufacturers Association - India
- Commonwealth Bank - Australia
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Parry Sugars Refinery, India
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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