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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, 16 October 12
DRY BULK FREIGHT RATES COULD IMPROVE ON CHINESE STIMULUS AND WINTER CARGO DEMAND SAYS BIMCO - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
BIMCO has given out its forecast for the next six weeks, in terms of freight rates for dry bulk carriers. According to them, Capesize TC Average rat ...
Monday, 15 October 12
IT'S STRICTLY COME CHARTERING - CLARKSON RESEARCH SERVICES
The charter market is a bit of a dance between ship owner and charterer: one leader, one follower; one step, two steps, turn... The dance is symbiot ...
Sunday, 14 October 12
SUB-BIT INDONESIA COAL AND CFR SOUTH CHINA COAL SWAPS: SOFT
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for December 2012 delivery lost 0.329 percent w- w but gained 0.248 percent d-d on Friday, 12 Oct ...
Sunday, 14 October 12
SUPRAMAX FREIGHT STEADY: PANAMAX FREIGHTS FIRM - VISTAAR
COALspot.com - The shipping market saw some hectic activity in the Cape and panamax sector and quite a lot of fixtures reported.
The BDI was up b ...
Friday, 12 October 12
HOW REAL IS THE THREAT OF PIRACY? - BIMCO
The threat of modern piracy remains serious, regardless of its seasonal variations and the fact that it is chiefly confined to the Indian Ocean, Gul ...
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- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- Energy Development Corp, Philippines
- MS Steel International - UAE
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- Antam Resourcindo - Indonesia
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- Economic Council, Georgia
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Renaissance Capital - South Africa
- Planning Commission, India
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- Aditya Birla Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- Posco Energy - South Korea
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
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