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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, 03 December 14
PROGRESSING SMELTER PROJECTS IN INDONESIA
Press Release: Indonesia’s ban on ‘raw mineral export’ that was designed to encouraging downstream investment in mineral processi ...
Wednesday, 03 December 14
SHIPPING MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
The dry bulk market seems unable to turn sentiment round and is still looking for direction. The BCI's 887-point free fall last week had an obv ...
Wednesday, 03 December 14
CAPESIZE DRY BULK CARRIERS ENTER 2015 WITH MIXED FORTUNES, WITH A POSITIVE AND A NEGATIVE SCENARIO BOTH EMERGING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The future of the Capesize dry bulk market appears to be engulfed from mixed “feelings” among analysts and market participants, despite ...
Tuesday, 02 December 14
KEY PLAYERS SHED NEW PERSPECTIVES ON COAL MARKETS
Press Release: Singapore’s ONLY and longest established Coal Trade event. Whilst Coal prices remain challenging, there is widespread consensu ...
Tuesday, 02 December 14
KOMIPO INVITES BIDS FOR 585,000 METRIC TONS OF COAL FOR Q1'15
COALspot.com - Korea Midland Power Co. Ltd. (KOMIPO) is inviting bids for the supply of 585,000 Metric Tons of coal. According to invitation, 5700 ...
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- Gujarat Mineral Development Corp Ltd - India
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Makarim & Taira - Indonesia
- Sakthi Sugars Limited - India
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
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- Samtan Co., Ltd - South Korea
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- VISA Power Limited - India
- Anglo American - United Kingdom
- Thai Mozambique Logistica
- Kobexindo Tractors - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bhatia International Limited - India
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Ministry of Finance - Indonesia
- PTC India Limited - India
- Aditya Birla Group - India
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Baramulti Group, Indonesia
- The University of Queensland
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- International Coal Ventures Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Lanco Infratech Ltd - India
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
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