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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, 24 May 13
US'S COAL PRODUCTION INCREASED WEEK ON WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 18.90 million short tons (mmst) of ...
Friday, 24 May 13
OPG POWER VENTURES OF INDIA LOOKING FOR 210,000 MT OF 4,200 GAR INDONESIAN THERMAL COAL
COALspot.com - OPG Power Ventures Plc (OPG) is an AIM listed (London Stock Exchange) and fast growing developer and operator of power plants in Indi ...
Thursday, 23 May 13
HANDY : THE ATLANTIC MARKET REMAINS UNCHANGED - FEARNRESEARCH
Handy
The Atlantic market remains unchanged. USG-Feast rates were around USD 19k. Little change from last week in the Pacific, fewer stems and tonn ...
Thursday, 23 May 13
COLOMBIA SHIPPED 11.74 MILLION TONS OF THERMAL COAL IN Q1
COALspot.om - Colombia produced about 18,388,972.94 mt of coal for the first quarter of 2013.
Q1' 2013 coal production was around 21.42 p ...
Wednesday, 22 May 13
COKAL SIGNS JV WITH MDM, FOR BARITO RIVER BARGING
COALspot.com - Cokal Limited (ASX: CKA) has announced that it has entered into a 50:50 Joint Venture (JV) with Meratus Advance Maritime (MDM) one of ...
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- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- The State Trading Corporation of India Ltd
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Jaiprakash Power Ventures ltd
- Australian Coal Association
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- London Commodity Brokers - England
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Mjunction Services Limited - India
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- The University of Queensland
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PNOC Exploration Corporation - Philippines
- Marubeni Corporation - India
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Coalindo Energy - Indonesia
- Parry Sugars Refinery, India
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Eastern Coal Council - USA
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- Carbofer General Trading SA - India
- Economic Council, Georgia
- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Eastern Energy - Thailand
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Karaikal Port Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
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