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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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Sunday, 16 September 12
GLOBAL LOW DEMAND ; INDONESIA COAL AND CFR SOUTH CHINA COAL SWAPS DIP
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for November 2012 delivery lost 1.345 percent W-O-W on Friday, 14 September 2012, closing but gai ...
Sunday, 16 September 12
THE FREIGHT RATES FROM INDONESIA TO INDIA EXPECTED TO BE STEADY - VISTAAR
COALspot.com - The freight market was mixed with most indices closing positive except for the Panamax index.
The main sentiment seems to be ...
Saturday, 15 September 12
FINANCE MINISTRY OPPOSES TAX INCENTIVE PLAN FOR COAL MINERS - JP
The Jakarta Post reported that, the Finance Ministry has turned down the idea of providing a fiscal incentive to the country’s coal mining ind ...
Friday, 14 September 12
DRY BULK MARKET LOOKS TOWARDS CHINA FOR SOME POSITIVE NEWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the dry bulk market freight rates submerged underwater for a large part of the year, dry bulk owners are looking for some positive enhancement ...
Friday, 14 September 12
GOVT OFFERS CONDITIONAL TAX HOLIDAY TO AILING COAL MINERS - JP
The Jakarta Post, one of the leading English news paper in Indonesia reported that, acknowledging difficulties encountered by coal miners due to a p ...
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- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Indian Energy Exchange, India
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- SMG Consultants - Indonesia
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Wilmar Investment Holdings
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- The State Trading Corporation of India Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- White Energy Company Limited
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Bangladesh Power Developement Board
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Latin American Coal - Colombia
- Siam City Cement PLC, Thailand
- Anglo American - United Kingdom
- Siam City Cement - Thailand
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- The University of Queensland
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Directorate Of Revenue Intelligence - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Gujarat Sidhee Cement - India
- London Commodity Brokers - England
- CNBM International Corporation - China
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
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