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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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Monday, 19 November 12
GOVT PREPARES TO FACE ANOTHER SUIT ON MINING LAW - THE JAKARTA POST
The government is gearing up to face a complaint on the 2009 Mining Law prepared by the same organization that previously brought down upstream oil ...
Monday, 19 November 12
IHS MCCLOSKEY ASIA PACIFIC COAL OUTLOOK CONFERENCE 2012
With the current global oversupply of thermal coal showing no signs of abating and spot prices falling to a two-year low, concerns are growing that ...
Sunday, 18 November 12
INDONESIAN SUB BITUMINOUS COAL SWAPS FOR JANUARY 2013 DELIVERY GAINS 1.29 PERCENT WOW
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for January 2013 delivery gains 1.29 percent WoW and 0.25 percent DoD on Friday, 16 Novembe ...
Saturday, 17 November 12
THE SUPRAMAX FREIGHT RATES FROM INDONESIA TO INDIA ARE EXPECTED TO BE UP NEXT WEEK - VISTAAR
COALspot.com - This week market sentiments ended positive with all the segments ending higher except for handy size which was almost at same levels ...
Saturday, 17 November 12
RECORD DEMOLITION ACTIVITY SEEKS TO CURB TONNAGE OVERSUPPLY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
This year will prove to be another record-breaker in terms of scrapping of older vessels across all shipping segments, as the equally feverish pace ...
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- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- Intertek Mineral Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Sinarmas Energy and Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Anglo American - United Kingdom
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Bhushan Steel Limited - India
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- Bukit Baiduri Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- White Energy Company Limited
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- MS Steel International - UAE
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Alfred C Toepfer International GmbH - Germany
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Kepco SPC Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- PTC India Limited - India
- Tamil Nadu electricity Board
- Bank of Tokyo Mitsubishi UFJ Ltd
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