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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, 19 December 09
THE FUTURES FOR 2010 - 2012 FIRMED UP COMPARED TO LAST WEEK AND WAS AT AROUND CAPE US$ 28,000 PER DAY - VISTAAR
COALspot.com (Singapore): The freight market continued to soften this week with major drop in the cape size index by almost 21 pct and Panamax , Sup ...
Friday, 18 December 09
CARGOTEC WINS IBJ'S BEST SHIP LOADING / UNLOADING SYSTEM AWARD WITH SIWERTELL
Cargotec’s Siwertell ship unloader has recently won International Bulk Journal’s best ship loading/unloading system award for 2009; out ...
Friday, 18 December 09
THERMAL COAL PROJECT MOVES AHEAD
A proposal for Australia's largest thermal coal project in Queensland's central west has taken a step forward.
Hancock Prospecting is proposing ...
Friday, 18 December 09
CHURCHILL MINING COMPLETES FEASIBILITY STUDY FOR EAST KUTAI COAL PROJECT
Churchill Mining Plc has announced the completion of the feasibility study for its flagship project, the 75% held East Kutai coal project in Indones ...
Friday, 18 December 09
COKING COAL SHORTAGE IN CHINA TO SPUR DEMAND FIGHT WITH JAPAN
China, the world’s largest steelmaker, faces a shortage of coking coal that may drive imports next year and spur a fight for resources with Ja ...
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- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Indo Tambangraya Megah - Indonesia
- Interocean Group of Companies - India
- MS Steel International - UAE
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- Edison Trading Spa - Italy
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Planning Commission, India
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ASAPP Information Group - India
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- SN Aboitiz Power Inc, Philippines
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- Baramulti Group, Indonesia
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Deloitte Consulting - India
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement - Thailand
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
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