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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, 22 December 12
FALL IN CAPE AND PANAMAX RATES DRAG BDI INDEX - VISTAAR
COALspot.com - The freight market further softened this week closing at 700 points (down by 10.71 pct). The cape index continued to fall and w ...
Saturday, 22 December 12
DELTA DUNIA MAKMUR PRODUCED 3.2 MILLION TONS OF COAL IN NOVEMBER' 12
COALspot.com - PT Delta Dunia Makmur Tbk., has removed 28.1 million bcm* (+1.8% YoY) of Overburden in November 2012 while coal production was at 3.2 ...
Friday, 21 December 12
JORC CODE, 2012 EDITION NOW FINALIZED
COALspot.com - The JORC Committee has announced that, the completion of the review of the JORC Code of 2012 Edition.
The JORC Code, 2012 Ed ...
Thursday, 20 December 12
COAL CLOSING IN ON OIL AS WORLD'S TOP ENERGY SOURCE BY 2017
COALspot.com - Coal’s share of the global energy mix continues to rise, and by 2017 coal will come close to surpassing oil as the world’ ...
Thursday, 20 December 12
CHINA'S IRON ORE AND COAL DEMAND WILL SHAPE THE CAPESIZE DRY BULK TRADE DURING 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the best efforts from ship owners to help alleviate the current tonnage oversupply issue in the dry bulk segment, especially in the larger v ...
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- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Planning Commission, India
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Bhatia International Limited - India
- Deloitte Consulting - India
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- London Commodity Brokers - England
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- MS Steel International - UAE
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- San Jose City I Power Corp, Philippines
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- South Luzon Thermal Energy Corporation
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- Minerals Council of Australia
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Chettinad Cement Corporation Ltd - India
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- Larsen & Toubro Limited - India
- GAC Shipping (India) Pvt Ltd
- AsiaOL BioFuels Corp., Philippines
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
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