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