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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, 25 June 10
INDIAS THIRD-LARGEST SHIPPING COMPANY BAGS US$ 31 MILLION DEAL WITH SL
Daily Mirror reported that, Mainboard-listed and India-owned dry bulk shipping firm Mercator Lines says it has won a US$ 31 million contract in Sri ...
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Thursday, 24 June 10
CHINA TARGETS 3.6 BILLION MT ANNUAL COAL OUTPUT FOR 2015
At a forum in Beijing entitled "Chinese energy strategy and energy development in the 12th five-year plan period (2011-2015)", He Youguo, ...
Thursday, 24 June 10
DRY BULK MARKET AT LOWEST POINT IN EIGHT MONTHS
The dry bulk market’s demise has failed to turn around so far this week, with the industry’s benchmark, the Baltic Dry Index (BDI), yest ...
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- Meenaskhi Energy Private Limited - India
- CIMB Investment Bank - Malaysia
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
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- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
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- Wilmar Investment Holdings
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- Central Electricity Authority - India
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- International Coal Ventures Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
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- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
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- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Alfred C Toepfer International GmbH - Germany
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coal and Oil Company - UAE
- White Energy Company Limited
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Borneo Indobara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Parliament of New Zealand
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Star Paper Mills Limited - India
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Indian Energy Exchange, India
- Ministry of Finance - Indonesia
- Timah Investasi Mineral - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- Bhatia International Limited - India
- The University of Queensland
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- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Mines - Canada
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- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Kapuas Tunggal Persada - Indonesia
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