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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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- ASAPP Information Group - India
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Romanian Commodities Exchange
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Thai Mozambique Logistica
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- SMG Consultants - Indonesia
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Planning Commission, India
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Wood Mackenzie - Singapore
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Semirara Mining Corp, Philippines
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Anglo American - United Kingdom
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- London Commodity Brokers - England
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- The University of Queensland
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