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