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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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Thursday, 12 July 12
SOUTHGOBI RESOURCES ANNOUNCES NOTICE OF INVESTMENT DISPUTE FILED AGAINST MONGOLIAN GOVERNMENT
Press Release - SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) (“SouthGobi”) announced today that SGQ Coal Investment Pte. Ltd., a wholly ...
Wednesday, 11 July 12
HBA DROPPED SHARPLY IN JULY
COALspot.com - Indonesian HBA fell to lowest level since September 2010 in July 2012. The monthly coal reference price for coal sales this mon ...
Wednesday, 11 July 12
SUB-BIT FOB INDONESIA COAL SWAP LOST $ 1.26 PER TON
COALspot.com - Sub-Bit FOB Indonesia Coal decline for a second day yesterday, according to SGX AsiaClear OTC Coal Swaps. The prices for shipments to ...
Tuesday, 10 July 12
DRY BULK MARKET RECORDS MODEST GAINS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market inched a bit higher on Monday, with the Baltic Dry Index (BDI) ending the session up by 5 points to 1,162. Most markets were hig ...
Saturday, 07 July 12
INDONESIA-JAPAN RELATIONS TURN SOUR - THE JAKARTA POST
The Jakarta Post, the one of the leading Indonesian English new papers reported that, Bilateral relations between Indonesia and Japan have recently ...
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- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Central Electricity Authority - India
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Australian Coal Association
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Planning Commission, India
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- Vedanta Resources Plc - India
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Independent Power Producers Association of India
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- MS Steel International - UAE
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
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