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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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Friday, 01 April 11
DRY BULK MARKET WEAKENS ON SLOWER DEMAND, HOPES FOR MID-TERM REBOUND ON JAPANS RECONSTRUCTION - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market, as reflected in the Baltic Dry Index (BDI) retreated for a third day yesterday, after staying flat on Monday, to end at 1,530 p ...
Wednesday, 30 March 11
CHALLENGER SIGNS OPTION AGREEMENTS TO PURCHASE FOUR COAL PROJECTS IN INDONESIA
Challenger Signs Three Exclusive Option Agreements to Purchase Four Coal Projects in East Kalimantan, Indonesia
Challenger Deep Resources Corp.ha ...
Wednesday, 30 March 11
KPCL TO IMPORT ONE MILLION TONS OF 6300 GAD COAL
COALspot.com - Karnataka Power Corporation a state utility of Karnataka, India called for open tender for supply of one million tons of 6300 Kcal/kg ...
Wednesday, 30 March 11
WIKA GRABS PROJECT FROM ADARO INDONESIA - INSIDER STORIES
One of Indonesia's largest thermal coal PT Adaro Indonesia has finally mandated PT Wijaya Karya Tbk (WIKA) as a contractor to install and manage ov ...
Tuesday, 29 March 11
JAPAN FACTOR RIPPLING THROUGH THE SHIPPING MARKETS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the world watching the latest developments regarding the nuclear crisis in Japan and the devastating effects of the recent tragedy that struck ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Star Paper Mills Limited - India
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Agrawal Coal Company - India
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- Parliament of New Zealand
- White Energy Company Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
- Bhushan Steel Limited - India
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Larsen & Toubro Limited - India
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Coalindo Energy - Indonesia
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- ICICI Bank Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Kaltim Prima Coal - Indonesia
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Baramulti Group, Indonesia
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- Petrochimia International Co. Ltd.- Taiwan
- London Commodity Brokers - England
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
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