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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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Friday, 27 January 12
DEMOLITION ACTIVITY NEEDS TO INCREASE SIGNIFICANTLY THIS YEAR AS WELL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The oversupply of vessels in most shipping sectors is so intense that it’s become clear to ship owners that unless they scrap as many of their ...
Thursday, 26 January 12
ABM INVESTAMA SEALS US$100 MIO CONTRACT - INSIDER STORIES
Insider Stories reported that, PT Reswara Minergi Hartama, a subsidary of PT ABM Investama Tbk (ABMM), has sealed a 2 million tons of coal export co ...
Thursday, 26 January 12
DRY BULK MARKETS DOWNFALL KNOWS NO LIMITS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s demise seems to have no visible end, as China’s Lunar Year Holidays continue this week, thus leaving demand with n ...
Wednesday, 25 January 12
CLEAN AND CLEAR MINING PERMITS TO BE COMPLETED END OF 2012 - BISNIS.COM
Bisnis.com reported that, the government plans to announce 700 mining permits with "clean and clear" status without overlapping on other p ...
Tuesday, 24 January 12
ANOTHER SEVERE DROP IN THE CAPESIZE - BRS
The lunar year celebrations and the high number of new building deliveries (more than 35 Capes so far in January as owners push 2011 deliveries into ...
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- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- Indika Energy - Indonesia
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Australian Coal Association
- PowerSource Philippines DevCo
- MS Steel International - UAE
- Central Java Power - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Electricity Generating Authority of Thailand
- Deloitte Consulting - India
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Sindya Power Generating Company Private Ltd
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Parry Sugars Refinery, India
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
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