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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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Sunday, 23 September 12
AN ANOTHER UNSTABLE WEEK FOR INDONESIAN COAL SWAPS
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for November 2012 delivery lost 1.10 percent and 0.916 percent WOW and DOD respectively ...
Sunday, 23 September 12
INDIA IMPORTED 11.40 PERCENT MORE INDONESIAN COAL IN AUGUST
COALspot.com: Indonesia, the world largest multi grade coal exporter, shipped 26,451,565* tons of coal in August 2012, compared to 27.88* mill ...
Saturday, 22 September 12
SOFT BUNKER PRICES KEEP INDONESIA TO INDIA FREIGHTS STABLE - VISTAAR
COALspot.com - The freight market overall remained buoyant with all indices up except for Panamax index. The main effect seems to be increased shipm ...
Friday, 21 September 12
SHIP BREAKING ACTIVITY REACHES NEW RECORDS, AS ALREADY 2012 LEVELS HAVE SURPASSED THE WHOLE OF 2011 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The vast oversupply of vessels, most notably in the dry bulk shipping sector, has forced ship owners to intensify their efforts towards recycling th ...
Thursday, 20 September 12
SUPRAMAX : INDO-INDIA ROUNDS WERE AROUND USD 12K - FEARNLEYS
Handy
Not a bad week for Supramax tonnage, if we compare Supramax developments to the bigger size tonnage. The rates have basically remained unchan ...
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- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Oldendorff Carriers - Singapore
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- White Energy Company Limited
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- Marubeni Corporation - India
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
- Standard Chartered Bank - UAE
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- MS Steel International - UAE
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- SMC Global Power, Philippines
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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