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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, 25 August 12
FREIGHT RATES ARE EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com - This week the indices showed some signs of improvement will all the segments moving up except for the handy size.
The BDI was marg ...
Saturday, 25 August 12
INDONESIAN COAL SWAP REMAINS STABLE AT LOW LEVEL
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for October 2012 delivery gain 0.804 percent W-o-W on Friday (24 August 2012) closing but lost 0. ...
Thursday, 23 August 12
INDONESIA-INDIA, LARGE ECO SUPRA FIXED AT USD 6K FOR DELIVERY SOUTH CHINA - FEARNLEYS AS
Handy
The market continued the same trend as last week, low activity and holidays in some countries.
Rate wise unchanged, with US Gulf/Continent ...
Thursday, 23 August 12
EGCO GROUP EXPANDS TOWARDS INTEGRATED ENERGY BUSINESS WITH INVESTMENT IN INDONESIAS COAL MINE
Electricity Generating Public Company Limited or EGCO Group, the Thailand’s first Independent Power Producer has continually invaded foreign m ...
Thursday, 23 August 12
EGCO GROUP ANNOUNCES 2 BILLION BAHT PROFITS IN Q2/2012
Successfully Establishes Integrated Energy Business and Strengthen Investments in ASEAN
Mr. Sahust Pratuknukul, President of Electri ...
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- Economic Council, Georgia
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Dalmia Cement Bharat India
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- Eastern Coal Council - USA
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Intertek Mineral Services - Indonesia
- Indonesian Coal Mining Association
- Bahari Cakrawala Sebuku - Indonesia
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Xindia Steels Limited - India
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- ASAPP Information Group - India
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Bangladesh Power Developement Board
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Indian Energy Exchange, India
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- The University of Queensland
- Georgia Ports Authority, United States
- Planning Commission, India
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- New Zealand Coal & Carbon
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Singapore Mercantile Exchange
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
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