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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, 17 April 11
ADARO TO PROPOSE US$75 MILLION DIVIDEND
COALspot.com - One of Indonesia's largest coal miner PT Adaro Energy Tbk (ADRO) is keen to propose a final dividend of US$75 million or Rp 20.17 (U ...
Saturday, 16 April 11
TNPL RECEIVES 1.6MT OF COAL OFFERS - SOURCES
COALspot.com - Tamil Nadu Newsprint and Papers Ltd. has closed its 160,000 MT coal inquiry today.
More than a half a dozen of Indian coal t ...
Friday, 15 April 11
DRY BULK MARKET KEEPS ON FALLING, ON LOW DEMAND AND HIGH SUPPLY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept its falling patern this week, with the industry’s benchmark, the Baltic Dry Index (BDI) retreating again yesterda ...
Thursday, 14 April 11
SUPRAS IN N.CHINA GET CLOSE TO $12000 FOR TRIPS VIA INDONESIA TO INDIA - FEARNBULK
Handy
The Atlantic market remains flat - very little new/fresh business and slow activity. Considerable prompt tonnage remains unfixed. The USG pa ...
Wednesday, 13 April 11
CAPESIZE VESSELS ARE DELIVERED AT A PACE OF ONE NEW VESSEL EVERY SECOND DAY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In a clear sign that it will take a significant rise in global seaborne dry bulk trade in order to be able to absorb the flurry of new building tonn ...
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- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- Minerals Council of Australia
- Essar Steel Hazira Ltd - India
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- Bhatia International Limited - India
- Siam City Cement PLC, Thailand
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Indian Energy Exchange, India
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
- India Bulls Power Limited - India
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- Anglo American - United Kingdom
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- GMR Energy Limited - India
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- Cement Manufacturers Association - India
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Eastern Energy - Thailand
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- International Coal Ventures Pvt Ltd - India
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