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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, 21 June 17
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Tuesday, 20 June 17
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During the past weeks, we have seen many organizations and think tanks show a more optimistic face with regards to the world economy. The World Ban ...
Monday, 19 June 17
PANAMAX RATES HELP BALTIC INDEX TO A POSITIVE MOVE
COALspot.com: The Freight market rose very marginally this past week compared to the previous week, as BDI and Panamax indexes show a positive tren ...
Friday, 16 June 17
WEEKLY U.S. COAL PRODUCTION RISES; UP 24.1% Y/Y
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15.5 million short tonn ...
Thursday, 15 June 17
SUPRAMAX NICKEL ORE FROM PHILIPPINES TO S. CHINA PAYING AROUND MID $10000 - FEARNLEYS
Supramax
Market looked more promising from both sides of the basins. Within Atlantic USG returned with tick better rates seen as tonnage kept tig ...
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- Parry Sugars Refinery, India
- Kapuas Tunggal Persada - Indonesia
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- Malabar Cements Ltd - India
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
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- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
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- Kobexindo Tractors - Indoneisa
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
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- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Petron Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- Barasentosa Lestari - Indonesia
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- Economic Council, Georgia
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Ministry of Mines - Canada
- Grasim Industreis Ltd - India
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Borneo Indobara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
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- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Finance - Indonesia
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
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- Timah Investasi Mineral - Indoneisa
- Mercator Lines Limited - India
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- Rio Tinto Coal - Australia
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
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- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Cement Manufacturers Association - India
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- Essar Steel Hazira Ltd - India
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- SN Aboitiz Power Inc, Philippines
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- CIMB Investment Bank - Malaysia
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