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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, 10 August 13
MOODY'S: OUTLOOK FOR US COAL INDUSTRY CHANGES TO STABLE FROM NEGATIVE
Moody's Investors Service has changed its outlook for the US coal industry to stable from negative, the rating agency says in a new report, "U ...
Saturday, 10 August 13
DEMOLITION ACTIVITY TO BE CRUCIAL AGAIN IN PROVIDING SUPPORT TO THE DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
We appear to have forgotten demolition activity this year, with the Baltic Dry Index gaining traction in the latter part of the second half and emer ...
Friday, 09 August 13
US PRODUCED 4.00 PERCENT LESS COAL ON WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.00 million short tons (mmst) of ...
Thursday, 08 August 13
HANDY : NO POSITIVE SENTIMENT FOR THE FAR EAST MARKET - FEARNRESEARCH
Handy
No positive sentiment for the Far East market. There are a number of ships coming open in SE Asia this week and owners rating mid/high USD 8k ...
Thursday, 08 August 13
MALAYSIA HOSTS THIRD ANNUAL ASIAN SUB-BITUMINOUS COAL USERS' GROUP CONFERENCE
Press Release : The third Annual Asian Sub-Bituminous Coal Users’ Group (ASBCUG) conference convenes Sept. 30-Oct. 3 at the Eastern & Orie ...
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- The State Trading Corporation of India Ltd
- Electricity Authority, New Zealand
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Parry Sugars Refinery, India
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- White Energy Company Limited
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- MS Steel International - UAE
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Antam Resourcindo - Indonesia
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Sindya Power Generating Company Private Ltd
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Indo Tambangraya Megah - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- Economic Council, Georgia
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Mining Services - Indonesia
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- Planning Commission, India
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
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