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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, 25 October 13
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED TOTALLED 803.1 MMST
COALspot.com – United States the world’s second largest coal producer produced approximately 19.10 million short tons (mmst) of coal in ...
Thursday, 24 October 13
PANAMAX: RATES SLIP ACROSS BOTH HEMISPHERES
Handy
We were back from holidays but still not much enquiries in the market. Overall future direction is uncertain. Currently, ships passing Singap ...
Thursday, 24 October 13
SHIP PRICES ARE INCREASING ON THE BACK OF IMPROVED MARKET SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on retreating from its recent highs, ending yesterday at 1,786 points, down 61 points on the day, with Capesizes leadin ...
Wednesday, 23 October 13
DRY BULK MARKET HAS SHOWN SIGNS OF STABILITY - INTERMODAL
Chartering (Wet: Stable+ / Dry: Stable-)
The Dry Bulk market has shown signs of stability this past week, with the sole exception of Capes, rates f ...
Wednesday, 23 October 13
MARKET SENTIMENT IN THE DRY BULK SECTOR REMAINS POSITIVE - YANNIS OLZIERSKY
Market sentiment in the dry bulk sector remains positive despite the latest correction in freight rates for the Capesize sector, which are sliding f ...
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- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Mjunction Services Limited - India
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Power Finance Corporation Ltd., India
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Maheswari Brothers Coal Limited - India
- Romanian Commodities Exchange
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- OPG Power Generation Pvt Ltd - India
- Central Java Power - Indonesia
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Australian Coal Association
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- Parliament of New Zealand
- Minerals Council of Australia
- European Bulk Services B.V. - Netherlands
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- London Commodity Brokers - England
- Marubeni Corporation - India
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
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