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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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- IEA Clean Coal Centre - UK
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Thiess Contractors Indonesia
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- Riau Bara Harum - Indonesia
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Planning Commission, India
- Minerals Council of Australia
- Electricity Authority, New Zealand
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- GVK Power & Infra Limited - India
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Bhushan Steel Limited - India
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Oldendorff Carriers - Singapore
- Indika Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- Eastern Energy - Thailand
- Kumho Petrochemical, South Korea
- Petron Corporation, Philippines
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Wilmar Investment Holdings
- PTC India Limited - India
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
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