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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, 17 November 11
DRY BULK MARKET INCHES FORWARD AND INTO HIGHER GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market edged higher yesterday, on the back of stronger demand for Capesize vessels and general improvement of sentiment on most of the ...
Thursday, 17 November 11
KOMIPO INVITES BIDS FOR 500K MT OF COAL
COALspot.com - Korea Midland Power Co. Ltd.(KOMIPO) is inviting bids for the supply of 500,000 Metric Tons of minimum 5700 kcal/kg coal of NAR bases ...
Thursday, 17 November 11
INDONESIAN GOVERNMENT PLANS TO ISSUE MORATORIUM ON COAL MINING LICENSE
COALspot.com - Energy and mineral resources ministry is plans to issue a moratorium on the issuance of coal mining licenses, after the anti-graft co ...
Wednesday, 16 November 11
KRISHNAPATNAM PORT BECOMES DEEPEST DRAFT PORT IN INDIA
COALspot.com - Krishnapatnam Port in its quest to be the best port in India has increased its draft to 17.5 meters, according to E-Mail statement fr ...
Wednesday, 16 November 11
CHINA'S INDONESIA COAL IMPORTS RISE IN OCTOBER
COALspot.com: Indonesia, the world largest coal exporter, shipped 31,162,688 MT of coal in October 2011.
China was a largest importer of Indonesi ...
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- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Australian Coal Association
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Georgia Ports Authority, United States
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Tamil Nadu electricity Board
- Wilmar Investment Holdings
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- New Zealand Coal & Carbon
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Altura Mining Limited, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Minerals Council of Australia
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Coal and Oil Company - UAE
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- London Commodity Brokers - England
- Ministry of Finance - Indonesia
- Maheswari Brothers Coal Limited - India
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Parliament of New Zealand
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- McConnell Dowell - Australia
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sojitz Corporation - Japan
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Trasteel International SA, Italy
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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