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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, 08 September 12
INDO INDIA ROUTE FREIGHT FOR SUPRAMAX REMAINS STRONG - CAPT. REDDY
COALspot.com - The freight market overall remained weak and except for cape index all other sectors were down. The biggest drop was in the Panamax s ...
Saturday, 08 September 12
RIO TINTO COMPLETES ACQUISITION OF BHP BILLITON'S INTERESTS IN RICHARDS BAY MINERALS
Rio Tinto has doubled its holding in Richards Bay Minerals (RBM) following the completion of its acquisition of BHP Billiton’s entire inte ...
Friday, 07 September 12
HBA GAINS $ 1.56 PER MT IN SEPTEMBER
COALspot.com - The Indonesian government’s declared coal reference price has gained US$ 1.56 per MT M-o-M. This is the first gain ...
Thursday, 06 September 12
SOME ANCHORED PANAMAX VESSELS WAITING FOR CARGOS TO COME
Handy
According to Fearnleys weekly report, in the smaller segments Fearnleys sees little to no changes since last week. There are still entering s ...
Thursday, 06 September 12
DRY BULK CARRIERS STILL IN HIGH DEMAND AMONG SHIP OWNERS, BUT NEWBUILDING ACTIVITY SLIDES IN AUGUST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The slide of the dry bulk market this year hasn't abated ship owners' appetite for dry bulk carriers, as evidenced by the steady interest expresse ...
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- Indonesian Coal Mining Association
- TNB Fuel Sdn Bhd - Malaysia
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sical Logistics Limited - India
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Tamil Nadu electricity Board
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- Baramulti Group, Indonesia
- Australian Coal Association
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- Kumho Petrochemical, South Korea
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Central Java Power - Indonesia
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- Marubeni Corporation - India
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- The University of Queensland
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Deloitte Consulting - India
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
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