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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, 12 October 11
INDONESIAS COAL RUSH - JOSEPH KIRSCHKE
COALspot.com - Last winter, the Chinese government mobilized thousands of soldiers and reservists of the People’s Liberation Army to the port ...
Wednesday, 12 October 11
CAPESIZE - A SURPRISE JUMP IN RATES - BRS
There was a surge across all sizes last week, resulting in the BDI gaining 101 points to end the week at 2,000 points (+5.3%). The BCI reached 3,218 ...
Wednesday, 12 October 11
CAPESIZE FREIGHT RATES BOUND TO RETREAT FROM 2011 HIGHS ON THE BACK OF TONNAGE OVERSUPPLY SAYS BIMCO
According to Nikos Roussanoglou, Hellenic Shipping, with the BDI (Baltic Dry Index) breaking yet another 2011 high yesterday and ending the se ...
Tuesday, 11 October 11
GLENCORE, SUITOR FOR BUMI PLC? - INSIDER STORIES
Insider Stories reported that, the largest commodities trader in the world, Glencore International Plc, is considering an opportunity to acquire a m ...
Tuesday, 11 October 11
RENUKA COALINDO BUYS JAMBI COAL
PT Renuka Coalindo Tbk, formerly PT Allbond Makmur Usaha Tbk plans to acquire PT Jambi Prima Coal holder of mining concession in Pauh, Sa ...
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- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- CIMB Investment Bank - Malaysia
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Marubeni Corporation - India
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- London Commodity Brokers - England
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Rio Tinto Coal - Australia
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Maharashtra Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- South Luzon Thermal Energy Corporation
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Latin American Coal - Colombia
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Electricity Authority, New Zealand
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- Economic Council, Georgia
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- The University of Queensland
- Leighton Contractors Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
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