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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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Saturday, 28 August 10
THE FUTURES FOR THREE YEARS (2010-2012) WAS FIRM FOR CAPE AND PANAMAX VESSELS - VISTAAR
COALspot.com: The freight market appeared to be heading for correction with the indices coming off during later part of the week. The BDI closed 44 ...
Saturday, 28 August 10
KRISHNAPATNAM PORT SETS AN ALL INDIA COAL DISCHARGE RECORD
COALspot.com: Krishnapatnam Port has established all new record for coal discharged in India using the conventional system of coal unloading for por ...
Friday, 27 August 10
PAKISTAN WILL IMPORT 8 TO 10 PERCENT MORE COAL IN 2011
COALspot.com: Pakistan to import 4 million ton of coal in 2011 up by 8-10 percent compare to this year’s imports. "Pakistan's tota ...
Thursday, 26 August 10
CHARTERERS SWITCHING FROM PANAMAX TO CAPE STEMS DUE TO CAPE FALL
Handy
The activity picked up in the Atlantic with more enquiries seen for short period tonnage for end August/beg September - As the grain season ...
Wednesday, 25 August 10
BUKIT ASAM OUT TO BECOME BIGGEST COAL PRODUCER
The Jakarta Post reported that, State-owned PT Batubara Bukit Asam Tbk intends to become the country's biggest coal producer in 2016 with productio ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Larsen & Toubro Limited - India
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- Medco Energi Mining Internasional
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Videocon Industries ltd - India
- Meralco Power Generation, Philippines
- Siam City Cement - Thailand
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Thai Mozambique Logistica
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- San Jose City I Power Corp, Philippines
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- PTC India Limited - India
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- Indogreen Group - Indonesia
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- Krishnapatnam Port Company Ltd. - India
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Tamil Nadu electricity Board
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Independent Power Producers Association of India
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
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