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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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Wednesday, 26 December 12
SHIP OWNERS WRAP UP NEWBUILDING DEALS PRIOR TO YEAR END - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the year inches closer and closer to its end, many ship owners are looking to close deals for newbuilding vessels they have been negotiating duri ...
Monday, 24 December 12
CONSTITUTIONAL COURT DECISION MAY FURTHER DELAY THE ISSUANCE OF NEW MINING BUSINESS LICENCES - TJEN SHE SIUNG
COALspot.com - In November 2012 the Constitutional Court of Indonesia issued a decision on amendments to certain provisions under the Mining Law No. ...
Monday, 24 December 12
BUNKER PRICES TO CONTINUE RISING, ALBEIT IN A SLOWER MODE, DURING THE NEXT FEW YEARS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEW
In a recent report, US-based consulting firm Mcquilling Services attempted to forecast the course of bunker prices during the next few years, as thi ...
Sunday, 23 December 12
Q4' 2013 CFR SOUTH CHINA COAL SWAP, US$ 3.40 HIGHER COMPARED TO Q1' 2013 PRICE
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q1’ 2013 delivery gained 1.94 percent M-M and WoW by 1.57percent but lost 0.35 ...
Saturday, 22 December 12
SECOND HAND VESSELS ENJOY HIGH DEMAND AS PRICES ARE ATTRACTIVE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the fact that the year is closing to its end, activity in the second hand vessel market has been more than high. Ship owners are looking to ...
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- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Siam City Cement PLC, Thailand
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Wood Mackenzie - Singapore
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
- The Treasury - Australian Government
- Indika Energy - Indonesia
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Star Paper Mills Limited - India
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- PTC India Limited - India
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
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