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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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Wednesday, 19 May 10
DRY BULK FREIGHT RATES' RALLY MAY BE SET TO END
The Baltic Dry Index (BDI) has rallied these past couple of weeks, almost touching the 4,000 point mark. But this positive development for dry bulk ...
Wednesday, 19 May 10
NEWCASTLE WEEKLY EXPORTS RISE; SHIP QUEUE LENGTHENS
Coal shipments from Australia's Newcastle port, the world's biggest export harbor for the fuel used in power stations, rose 2.9 percent last week ...
Tuesday, 18 May 10
THE BDI HIT A FIVE-MONTH HIGH AT THE CLOSE OF LAST WEEK
According to BRS, One of the oldest ship broker, at 3,929 points, the BDI hit a five-month high at the close of last week. The Capesize four time ch ...
Tuesday, 18 May 10
COAL TRADER CHINA QINFA TO BUY TWO BULK CARRIERS FOR 69 MLN USD
China Qinfa Group, a leading non-State-owned coal trader on China's mainland, said Sunday it had signed shipbuilding contracts to pay 69 million U. ...
Monday, 17 May 10
INDONESIA SHIPPED 15.51 PERCENT LESS COAL IN APRIL THAN A MONTH EARLIER
COALspot.com: Indonesia, the world largest coal exporter, shipped 23,331,542 MT of coal in April 2010, compare to 27.61 million tons in ...
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- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Minerals Council of Australia
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- Deloitte Consulting - India
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- IHS Mccloskey Coal Group - USA
- Jaiprakash Power Ventures ltd
- PowerSource Philippines DevCo
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Wood Mackenzie - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
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