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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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Wednesday, 11 January 12
NEWBUILDING ORDERS DECLINE, AS SHIP OWNERS REALIZE OVERSUPPLY WILL "KILL" THEM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With 2012 now underway, it will be rather interesting to see how ship owners will play the "newbuilding ordering" card to their favor, as ...
Tuesday, 10 January 12
THE 4TH DEEPWATER ASIA CONGRESS 2012 WILL KICK OFF ON MAY 23 - 25
Press release - Based on the past three years’ success, SZ & W Group is excited to announce the 4th Deepwater Asia Congress will be held o ...
Monday, 09 January 12
2012: WHAT WILL IT BRING FOR THE DRY BULK MARKET? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A further increase in dry bulk demand could be the remedy for most of the industry's oversupply issues, together of course with the high level of s ...
Sunday, 08 January 12
ICICI OUTLOOK ON INDIAN POWER, MINING,CEMENT, AND SHIPPING SECTORS PERFORMANCE IN 2012
Broking firm, ICICIdirect (India) has come out with report on sectors outlook for 2012. IRIS has collated key highlights for each sector from ...
Sunday, 08 January 12
SUPRAMAX DELIVERY SOUTH CHINA FOR TRIPS VIA INDONESIA WERE REPORTED AROUND $ 7000 PER DAY - VISTAAR
Wish You a Very Happy and Prosperous New year 2012.
COALspot.com - The last report by us was on 16th Dec 2011 and because of holidays this would ...
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- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- Directorate Of Revenue Intelligence - India
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- MS Steel International - UAE
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- Thai Mozambique Logistica
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- PTC India Limited - India
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- The Treasury - Australian Government
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- Indian Oil Corporation Limited
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Orica Mining Services - Indonesia
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- GVK Power & Infra Limited - India
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- Planning Commission, India
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Australian Coal Association
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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