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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, 23 May 14
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Thursday, 22 May 14
CAPESIZE : RATES ARE STILL UNDER PRESSURE
Handy
A quiet start into the week in Far East, some fresh Indonesian coal order in the market. For trips within S.E. Asia, Supras are trading aro ...
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- Grasim Industreis Ltd - India
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- Krishnapatnam Port Company Ltd. - India
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- GMR Energy Limited - India
- Semirara Mining Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Sindya Power Generating Company Private Ltd
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- The University of Queensland
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- VISA Power Limited - India
- Petron Corporation, Philippines
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
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