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