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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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Wednesday, 26 December 12
SHIP OWNERS WRAP UP NEWBUILDING DEALS PRIOR TO YEAR END - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the year inches closer and closer to its end, many ship owners are looking to close deals for newbuilding vessels they have been negotiating duri ...
Monday, 24 December 12
CONSTITUTIONAL COURT DECISION MAY FURTHER DELAY THE ISSUANCE OF NEW MINING BUSINESS LICENCES - TJEN SHE SIUNG
COALspot.com - In November 2012 the Constitutional Court of Indonesia issued a decision on amendments to certain provisions under the Mining Law No. ...
Monday, 24 December 12
BUNKER PRICES TO CONTINUE RISING, ALBEIT IN A SLOWER MODE, DURING THE NEXT FEW YEARS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEW
In a recent report, US-based consulting firm Mcquilling Services attempted to forecast the course of bunker prices during the next few years, as thi ...
Sunday, 23 December 12
Q4' 2013 CFR SOUTH CHINA COAL SWAP, US$ 3.40 HIGHER COMPARED TO Q1' 2013 PRICE
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q1’ 2013 delivery gained 1.94 percent M-M and WoW by 1.57percent but lost 0.35 ...
Saturday, 22 December 12
SECOND HAND VESSELS ENJOY HIGH DEMAND AS PRICES ARE ATTRACTIVE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the fact that the year is closing to its end, activity in the second hand vessel market has been more than high. Ship owners are looking to ...
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- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Essar Steel Hazira Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- Latin American Coal - Colombia
- Maheswari Brothers Coal Limited - India
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Oldendorff Carriers - Singapore
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- The Treasury - Australian Government
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
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