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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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Wednesday, 26 October 11
PWCS GLOBAL SHIPPING BENCHMARKING ANALYSIS: RECOVERY IN 2010 BUT GREAT UNCERTAINLY FOR 2011
The recovery of global trade in 2010 to the same levels as 2008 led to an improvement in the overall performance of shipping companies in 2010 compa ...
Wednesday, 26 October 11
INDIAN MARKET WAS REMAINED TIGHT THE WHOLE LAST WEEK - BRS
The market once more seems to be at a crossroads. The indices last week remained fairly stable (except for the Panamax sector), ending the week as f ...
Tuesday, 25 October 11
DRY BULK MARKET STEADY, ANALYSTS LOOKING FOR ADDED PRESSURE ON THE MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was unchanged on Monday, with the industry’s benchmark, the BDI (Baltic Dry Index) ending the session at 2,153 points, exa ...
Monday, 24 October 11
NEW HEAD OF INDONESIA'S MINING MINISTRY GETS RAKED OVER THE COALS - JOSEPH KIRSCHKE
COALspot.com - Following Indonesia’s presidential cabinet shakeup last week, many are questioning the qualifications of Energy and Mineral Res ...
Monday, 24 October 11
CHINA QINHUANGDAO COAL PRICE RISES TO HIGHEST IN THREE YEARS - BUSINESSWEEK
Business week reported that, China’s power-station coal price rose to the highest level in three years as power stations and central heating p ...
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- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Aditya Birla Group - India
- Goldman Sachs - Singapore
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Baramulti Group, Indonesia
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Ministry of Mines - Canada
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- SMG Consultants - Indonesia
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Videocon Industries ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- Ministry of Finance - Indonesia
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indogreen Group - Indonesia
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
- Globalindo Alam Lestari - Indonesia
- White Energy Company Limited
- The University of Queensland
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Planning Commission, India
- Orica Mining Services - Indonesia
- Bhatia International Limited - India
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Ministry of Transport, Egypt
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- VISA Power Limited - India
- Bhushan Steel Limited - India
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
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