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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, 07 December 13
A RARE TIME IN RECENT SHIPPING MARKET HISTORY: BOTH DRY BULK AND VLCC TANKER EARNINGS ARE ON THE RISE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Around this time of year, back in 2008, i.e. five years ago, the shipping markets were plagued with the aftermath of the global financial crisis tha ...
Friday, 06 December 13
INDONESIAN PARLIAMENT REJECTED A GOVERNMENT PROPOSAL TO EASE THE BAN ON EXPORTING UNPROCESSED ORE
COALspot.com: Indonesian House of Representatives rejected a proposal from Energy and Mineral Resources Minister Jero Wacik on to ease the ban on ex ...
Friday, 06 December 13
THE MINISTRY OF ENERGY & MINERAL RESOURCES OF INDONESIA FIXED DEC'13 HBA AT US$ 80.31
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has increased government declared coal bench mark price by US$ 2.18 / MT ...
Friday, 06 December 13
US PRODUCED APPROXIMATELY 82.8 MILLION SHORT TONS OF COAL IN NOVEMBER 2013
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.00 million short tons (mmst) of coal in ...
Friday, 06 December 13
PANAMAXES HAVE BEEN THE ' WEAPON OF CHOICE' BY MOST DRY BULK SHIP OWNERS DURING 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Low ship prices, the direct consequence of subdued freight rates for the larger part of 2013 have been the main driving force behind this year's ag ...
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- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Formosa Plastics Group - Taiwan
- Petrochimia International Co. Ltd.- Taiwan
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bayan Resources Tbk. - Indonesia
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- The University of Queensland
- The State Trading Corporation of India Ltd
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Meralco Power Generation, Philippines
- MS Steel International - UAE
- Australian Coal Association
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
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