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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 October 10
COAL PRICES AT QINHUANGDAO PORT UP - CAPITALVUE
Capitalvue reported that, prices of steam coal yielding 5,500 kilocalories per kilogram (kcal/kg) in Qinhuangdao Port have risen five yuan to 715-72 ...
Thursday, 14 October 10
DRY BULK MARKET MAINTAINS POSITIVE TREND ON FIRMER CHINESE IRON ORE DEMAND
The dry bulk market has kept its upward trend set since last week, with the industry’s main benchmark, the Baltic Dry Index (BDI) rising to 2, ...
Tuesday, 12 October 10
DRY BULK MARKET LOOKING FOR DIRECTION AFTER WEEK OF CAPESIZE GROWTH
The dry bulk market ended Monday unchanged from Friday’s closing, today standing at 2,695 points. In summary, the capesize and the supramax se ...
Tuesday, 12 October 10
COAL SPOT TRADING MAY SOOTH PRICING CONFLICTS - GLOBAL TIMES
Global Times reported that, Tianjin-based Bohai Commodity Exchange launched steam coal for spot trading for the first time Monday. Steam coal is mai ...
Monday, 11 October 10
INDONESIAN POWER PLANTS AND OTHER INDUSTRIES TO BURN 78.97 MLN TONS OF COAL IN 2011
COALspot.com: The Minister of Energy and Mineral Resources of Indonesia has issued a ministerial degree 2360 K/30/MEM/ 2010 related to Domestic mark ...
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- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Singapore Mercantile Exchange
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Maharashtra Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Malabar Cements Ltd - India
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- Sarangani Energy Corporation, Philippines
- Thiess Contractors Indonesia
- Rashtriya Ispat Nigam Limited - India
- Marubeni Corporation - India
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Latin American Coal - Colombia
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Economic Council, Georgia
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Australian Coal Association
- Indian Energy Exchange, India
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- MS Steel International - UAE
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- Global Coal Blending Company Limited - Australia
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- San Jose City I Power Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
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