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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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Friday, 27 January 12
DEMOLITION ACTIVITY NEEDS TO INCREASE SIGNIFICANTLY THIS YEAR AS WELL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The oversupply of vessels in most shipping sectors is so intense that it’s become clear to ship owners that unless they scrap as many of their ...
Thursday, 26 January 12
ABM INVESTAMA SEALS US$100 MIO CONTRACT - INSIDER STORIES
Insider Stories reported that, PT Reswara Minergi Hartama, a subsidary of PT ABM Investama Tbk (ABMM), has sealed a 2 million tons of coal export co ...
Thursday, 26 January 12
DRY BULK MARKETS DOWNFALL KNOWS NO LIMITS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s demise seems to have no visible end, as China’s Lunar Year Holidays continue this week, thus leaving demand with n ...
Wednesday, 25 January 12
CLEAN AND CLEAR MINING PERMITS TO BE COMPLETED END OF 2012 - BISNIS.COM
Bisnis.com reported that, the government plans to announce 700 mining permits with "clean and clear" status without overlapping on other p ...
Tuesday, 24 January 12
ANOTHER SEVERE DROP IN THE CAPESIZE - BRS
The lunar year celebrations and the high number of new building deliveries (more than 35 Capes so far in January as owners push 2011 deliveries into ...
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- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- San Jose City I Power Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Meralco Power Generation, Philippines
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Central Java Power - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Economic Council, Georgia
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Posco Energy - South Korea
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- The University of Queensland
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- White Energy Company Limited
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Planning Commission, India
- Petron Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Ambuja Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- Vedanta Resources Plc - India
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