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