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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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Tuesday, 30 October 12
NEW BUILDING ORDERING ACTIVITY KEEPS ON RETREATING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship owners have refrained from placing any new orders of vessels during the course of the past few days, according to shipbroker reports. According ...
Monday, 29 October 12
US COAL EXPORTS ARE EXPECTED TO REACH 125 MILLION TONS THIS YEAR - EIA
COALspot.com - US coal exports are expected to reach 125 million tons this year, surpassing the old record of about 113 million tons set in 1981, sa ...
Sunday, 28 October 12
SUB-BIT INDONESIA COAL SWAPS (FOB ) FOR DECEMBER 2012 DELIVERY STAYED FLAT D-D
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for December 2012 delivery flat on D-D but gained 0.38 percent on W-W on Friday, 26 October 2012, ...
Sunday, 28 October 12
INDONESIA TO INDIA SUPRAMAX FREIGHT MARKET FAIRLY STEADY - VISTAAR
COALspot.com - The Cape size sector continued to remain active with iron ore movement being steady. All other sectors were down.
The BDI was up b ...
Friday, 26 October 12
SHIPPING MARKETS HEADING FOR DIVISION AND MULTI-TIER WILL BECOME THE NORM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
It seems that something is expected to be fundamentally different in the way that the shipping markets will be operating in the future, according to ...
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- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Ceylon Electricity Board - Sri Lanka
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- Manunggal Multi Energi - Indonesia
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Mintek Dendrill Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Australian Coal Association
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- VISA Power Limited - India
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- MS Steel International - UAE
- Planning Commission, India
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- Rio Tinto Coal - Australia
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- GVK Power & Infra Limited - India
- Independent Power Producers Association of India
- SMG Consultants - Indonesia
- Intertek Mineral Services - Indonesia
- Minerals Council of Australia
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
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