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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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Monday, 30 January 17
DUE TO LUNAR YEAR HOLIDAYS, THE FREIGHT MARKET STAYED WEAK
COALspot.com: Due to Lunar year holidays and celebration, the Freight market was down in all segments this past week.
The Baltic Exchange, tra ...
Friday, 27 January 17
U.S WEEKLY COAL OUTPUT RISES FOR THIRD STRAIGHT WEEK
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.8 million short ton ...
Wednesday, 25 January 17
MARKET INSIGHT - KONSTANTINOS KAKAVITSAS
Remember that old but classic song called “Destination Unknown”? Well that is where the oil market is heading right now. The song made ...
Tuesday, 24 January 17
MARKET UPDATE - ALLIED
This week at the World Economic Forum in the Swiss resort of Davos we had a historic first via the attendance and speech given by China’s pre ...
Monday, 23 January 17
THE PORT OF NEWCASTLE SHIPPED $AU 15.279 BILLION WORTH OF 161.399 MILLION TONS OF COAL IN 2016
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped $AU 1,453.1 M ...
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- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- Leighton Contractors Pty Ltd - Australia
- Thiess Contractors Indonesia
- Rio Tinto Coal - Australia
- SMG Consultants - Indonesia
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Global Business Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Ministry of Mines - Canada
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Mercuria Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Sojitz Corporation - Japan
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Maharashtra Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Planning Commission, India
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Riau Bara Harum - Indonesia
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Larsen & Toubro Limited - India
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Latin American Coal - Colombia
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- White Energy Company Limited
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TeaM Sual Corporation - Philippines
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