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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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Monday, 19 November 12
GOVT PREPARES TO FACE ANOTHER SUIT ON MINING LAW - THE JAKARTA POST
The government is gearing up to face a complaint on the 2009 Mining Law prepared by the same organization that previously brought down upstream oil ...
Monday, 19 November 12
IHS MCCLOSKEY ASIA PACIFIC COAL OUTLOOK CONFERENCE 2012
With the current global oversupply of thermal coal showing no signs of abating and spot prices falling to a two-year low, concerns are growing that ...
Sunday, 18 November 12
INDONESIAN SUB BITUMINOUS COAL SWAPS FOR JANUARY 2013 DELIVERY GAINS 1.29 PERCENT WOW
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for January 2013 delivery gains 1.29 percent WoW and 0.25 percent DoD on Friday, 16 Novembe ...
Saturday, 17 November 12
THE SUPRAMAX FREIGHT RATES FROM INDONESIA TO INDIA ARE EXPECTED TO BE UP NEXT WEEK - VISTAAR
COALspot.com - This week market sentiments ended positive with all the segments ending higher except for handy size which was almost at same levels ...
Saturday, 17 November 12
RECORD DEMOLITION ACTIVITY SEEKS TO CURB TONNAGE OVERSUPPLY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
This year will prove to be another record-breaker in terms of scrapping of older vessels across all shipping segments, as the equally feverish pace ...
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- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- Intertek Mineral Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Rashtriya Ispat Nigam Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- Kumho Petrochemical, South Korea
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- Minerals Council of Australia
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- PowerSource Philippines DevCo
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- PTC India Limited - India
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- Planning Commission, India
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Indian Energy Exchange, India
- White Energy Company Limited
- Mercator Lines Limited - India
- Economic Council, Georgia
- MS Steel International - UAE
- Bulk Trading Sa - Switzerland
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- The University of Queensland
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Australian Coal Association
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bayan Resources Tbk. - Indonesia
- Kepco SPC Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
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