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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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Friday, 26 September 14
NEWCASTLMAXES ARE THE MOST SOUGHT AFTER VESSELS BY SHIP OWNERS TODAY SAYS VESSELS VALUE
KNOWLEDGE TO ELEVATE
Determining a ship’s fair value can be a very tricky business, especially when you’re the one paying. As such ...
Thursday, 25 September 14
LACK OF COAL BUSINESS PUSHING DOWN PANAMAX EARNINGS IN PACIFIC
Handy
In the Atlantic we see rates steady climbing upwards. More coal cargoes out of USG and USEC are helping the TA market which is up some USD ...
Wednesday, 24 September 14
ADARO AGREED TO REDUCE ITS CONCESSION AREA TO 31,379.8 HECTARES
COALspot.com: PT Adaro Energy Tbk (Adaro Energy) today announced that, PT Adaro Indonesia (AI), its wholly owned subsidiary, entered into a M ...
Wednesday, 24 September 14
CAPESIZE: ACTIVITY IN BOTH BASINS WAS UNIMPRESSIVE
COALspot.com: The end of the week prior seems to have marked the tone for the days that followed, with the Dry Bulk market giving up a significant ...
Tuesday, 23 September 14
MEDCO TO INCREASE ITS COAL PRODUCTION NEXT YEAR
COALspot.com: PT Medco Energi Internasional is looking to increase its coal production next year, supported by the launch of operations at its Duta ...
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- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Lanco Infratech Ltd - India
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- PTC India Limited - India
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Minerals Council of Australia
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Indogreen Group - Indonesia
- Bayan Resources Tbk. - Indonesia
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- Ambuja Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- Vedanta Resources Plc - India
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- Eastern Coal Council - USA
- White Energy Company Limited
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
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