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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, 30 January 10
THE ECI / CHINA (S7) ROUTE SOFTENED BY $ 5,736 AND CLOSED AT $ 27,360 PER DAY - VISTAAR SHIPPING
COALspot.com (Singapore): The freight market continued to soften this week probably in anticipation of Chinese New year holidays.
BDI INDEX
...
Saturday, 30 January 10
INDONESIA TO CONSTRUCT 93 POWER PLANTS IN 2ND PROJECT
The government has announced its list of 93 power plants to be built under the second 10,000-megawatt (MW) power generation scheme.
"With th ...
Saturday, 30 January 10
COAL FIRMS TO KEEP NATION IN THE BLACK
Some Indonesian coal mining companies on Friday pledged to allocate a greater share of their production this year to meet domestic market obligation ...
Friday, 29 January 10
INDIA STEAM COAL IMPORTS TO DOUBLE, BOOST SOUTH AFRICA
* SAfrica seen shipping 75 pct of its coal to Asia in 2010
* Logistics woes hamper SAfrica exports, India imports
India's steam coal imports ar ...
Thursday, 28 January 10
THE IRON ORE EXPORTS FROM INDIA TO CHINA ARE DOWN AND THE RATES DROPPED
HANDY
The BSI has continued its downward trend confirming the softening of the Atlantic since the previous week and reflecting a correction of the ...
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- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- White Energy Company Limited
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Coalindo Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Sinarmas Energy and Mining - Indonesia
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Romanian Commodities Exchange
- CIMB Investment Bank - Malaysia
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Central Java Power - Indonesia
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Singapore Mercantile Exchange
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mjunction Services Limited - India
- Independent Power Producers Association of India
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