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