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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, 14 July 11
INDO GOVT. SETS JULY COAL REFERENCE PRICE AT US$ 118.24 PER TON
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia sets coal spot price benchmark for July 2011 at US$ 118.24 per ton, US$ 0 ...
Thursday, 14 July 11
DRY BULK MARKET KEEPS FALLING ON WEAK CAPESIZE SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept on retreating on Wednesday, with the Baltic Dry Index (BDI) falling to 1,383 points, from 1,411 of the previous day. Capesi ...
Thursday, 14 July 11
UNITED TRACTORS BUYS DUTA SEJAHTERA - INSIDER STORIES
Insider Stories reported that, PT United Tractors Tbk (UNTR), via a wholly-owned subsidiary PT Tuah Turangga Agung, will acquire PT Duta Sejahtera a ...
Wednesday, 13 July 11
ANOTHER FIRMER WEEK FOR THE CAPES - BRS
Barry Rogliano Salles reported that, there were mixed results for the dry bulk market this week: the Capesize and Panamax markets performed well gai ...
Tuesday, 12 July 11
INDONESIAN MINERS PLAN $70M INVESTMENT TO UPGRADE QUALITY OF COAL - THE JAKARTA GLOBE
One of the leading english language news paper in indonesia, the Jakarta globe reported that, as the government implements a ban on the export of po ...
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- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Commonwealth Bank - Australia
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Heidelberg Cement - Germany
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Chamber of Mines of South Africa
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Jindal Steel & Power Ltd - India
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- The University of Queensland
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Parliament of New Zealand
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- San Jose City I Power Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- Salva Resources Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- PTC India Limited - India
- Mintek Dendrill Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Uttam Galva Steels Limited - India
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
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