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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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Thursday, 12 July 12
SOUTHGOBI RESOURCES ANNOUNCES NOTICE OF INVESTMENT DISPUTE FILED AGAINST MONGOLIAN GOVERNMENT
Press Release - SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) (“SouthGobi”) announced today that SGQ Coal Investment Pte. Ltd., a wholly ...
Wednesday, 11 July 12
HBA DROPPED SHARPLY IN JULY
COALspot.com - Indonesian HBA fell to lowest level since September 2010 in July 2012. The monthly coal reference price for coal sales this mon ...
Wednesday, 11 July 12
SUB-BIT FOB INDONESIA COAL SWAP LOST $ 1.26 PER TON
COALspot.com - Sub-Bit FOB Indonesia Coal decline for a second day yesterday, according to SGX AsiaClear OTC Coal Swaps. The prices for shipments to ...
Tuesday, 10 July 12
DRY BULK MARKET RECORDS MODEST GAINS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market inched a bit higher on Monday, with the Baltic Dry Index (BDI) ending the session up by 5 points to 1,162. Most markets were hig ...
Saturday, 07 July 12
INDONESIA-JAPAN RELATIONS TURN SOUR - THE JAKARTA POST
The Jakarta Post, the one of the leading Indonesian English new papers reported that, Bilateral relations between Indonesia and Japan have recently ...
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- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Salva Resources Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- Standard Chartered Bank - UAE
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Metalloyd Limited - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- The University of Queensland
- Bhatia International Limited - India
- Directorate Of Revenue Intelligence - India
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Bayan Resources Tbk. - Indonesia
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- PTC India Limited - India
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Directorate General of MIneral and Coal - Indonesia
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Attock Cement Pakistan Limited
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Bulk Trading Sa - Switzerland
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Minerals Council of Australia
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- Economic Council, Georgia
- Tamil Nadu electricity Board
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
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