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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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Saturday, 22 December 12
FALL IN CAPE AND PANAMAX RATES DRAG BDI INDEX - VISTAAR
COALspot.com - The freight market further softened this week closing at 700 points (down by 10.71 pct). The cape index continued to fall and w ...
Saturday, 22 December 12
DELTA DUNIA MAKMUR PRODUCED 3.2 MILLION TONS OF COAL IN NOVEMBER' 12
COALspot.com - PT Delta Dunia Makmur Tbk., has removed 28.1 million bcm* (+1.8% YoY) of Overburden in November 2012 while coal production was at 3.2 ...
Friday, 21 December 12
JORC CODE, 2012 EDITION NOW FINALIZED
COALspot.com - The JORC Committee has announced that, the completion of the review of the JORC Code of 2012 Edition.
The JORC Code, 2012 Ed ...
Thursday, 20 December 12
COAL CLOSING IN ON OIL AS WORLD'S TOP ENERGY SOURCE BY 2017
COALspot.com - Coal’s share of the global energy mix continues to rise, and by 2017 coal will come close to surpassing oil as the world’ ...
Thursday, 20 December 12
CHINA'S IRON ORE AND COAL DEMAND WILL SHAPE THE CAPESIZE DRY BULK TRADE DURING 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the best efforts from ship owners to help alleviate the current tonnage oversupply issue in the dry bulk segment, especially in the larger v ...
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- ASAPP Information Group - India
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- Georgia Ports Authority, United States
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PowerSource Philippines DevCo
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Salva Resources Pvt Ltd - India
- VISA Power Limited - India
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- London Commodity Brokers - England
- Parliament of New Zealand
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- CNBM International Corporation - China
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- Sindya Power Generating Company Private Ltd
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Central Electricity Authority - India
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
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