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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, 04 July 14
US: WEEKLY COAL PRODUCTION SLIGHTLY UP W-O-W
COALspot.com – United States the world's second largest coal producer, produced approximately 19.4 million short tons (mmst) of coa ...
Friday, 04 July 14
PARAM MITRA COAL RESOURCES SECURES US$ 7.5M INVESTMENT FROM TEMBUSU PARTNERS
Param Mitra Coal Resources Pte Ltd (“PMCR”), which owns two operating coal mines in Indonesia, has secured from Singapore private equit ...
Thursday, 03 July 14
BUMI TRANSFERS 19% OF KPC STAKE VALUED AT US$ 950 MILLION TO CIC
COALspot.com: PT. Bumi Resources announces that 19% of its holdings in Kaltim Prima Coal (KPC), valued at US$ 950 million, has been transferred to ...
Thursday, 03 July 14
PANAMAX : IN THE ATLANTIC, OWNERS ARE WILLING TO FIX AT ABOUT $2.5K PER DAY - FEARNEYS
Handy
In its latest weekly report, shipbroker Fearneys noted that, this week seems to have been more of a wait and see game between owners and ch ...
Wednesday, 02 July 14
NEWMONT FILES FOR INTERNATIONAL ARBITRATION ON ORE EXPORT BAN - THE JAKARTA POST
PT Newmont Nusa Tenggara (NNT), a subsidiary of United States-based Newmont Corporation, has filed for international arbitration against the govern ...
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- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Planning Commission, India
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Indonesian Coal Mining Association
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- Aditya Birla Group - India
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- PetroVietnam Power Coal Import and Supply Company
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
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