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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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Sunday, 10 July 11
DRY BULK MARKET SHOWING SIGNS OF IMPROVEMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Stronger Capesize demand has helped propel the dry bulk market forward this week, with the Baltic Dry Index (BDI) ending yesterday’s session u ...
Sunday, 10 July 11
INDONESIAN BAYAN RESOURCES TO SUPPLY 100 MILLION TONS OF COAL TO INDIAN UNIVERSAL SUCCESS ENTERPRISES LIMITED
Coal miner PT Bayan Resources Tbk (BYAN), that is owned by Dato' Low Tuck Kwong, has entered into a conditional sales and purchase agreement to sup ...
Thursday, 07 July 11
BELOW 5100 COAL WILL BE BANNED FOR EXPORT BY 12 JANUARY 2014
COALspot.com - Indonesian government is in the process of drafting an amendment for government regulation 23/ 2010.
GR 23/2010 has issued to sup ...
Wednesday, 06 July 11
ATLAS RESOURCES TO OFFLOAD 17 PERCENT IPO - INSIDER STORIES
Coking and thermal coal miner PT Atlas Energi Resources aims to offload 17percent new shares of its enlarged capital after Eid-Fitri holidays, as qu ...
Tuesday, 05 July 11
UNTR REVISES UP SALES TO 7,500 UNITS - INSIDER STORIES
PT United Tractors Tbk (UNTR), distributor of Komatsu heavy equipment and parent of PT Pamapersada Nusantara, has revised up its equipment sales tar ...
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- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Toyota Tsusho Corporation, Japan
- Bukit Baiduri Energy - Indonesia
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Indian Energy Exchange, India
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- Manunggal Multi Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- VISA Power Limited - India
- The University of Queensland
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- Power Finance Corporation Ltd., India
- Formosa Plastics Group - Taiwan
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- Madhucon Powers Ltd - India
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Banpu Public Company Limited - Thailand
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
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