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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, 14 December 16
INTERNATIONAL TRIBUNAL DISMISSED CHURCHILL MINING'S DAMAGES CLAIM AGAINST REPUBLIC OF INDONESIA
The Directors of Churchill Mining plc advise that, the ICSID Tribunal (“Tribunal”) granted Indonesia’s application to dismiss the ...
Wednesday, 14 December 16
20/20 VISION! - JOHN N. COTZIAS
2020; A year that could be changing shipping. In early November, the International Maritime Organization (IMO) announced that it would set a 0.5% s ...
Tuesday, 13 December 16
THE FREIGHT MARKET MAY WELL BE SHOWING SIGNS OF HEADING FOR ITS DOWNWARD CORRECTIVE PHASE - ALLIED
2016 has been a tough market for dry bulkers and through these difficult earnings, we have seen some of the lowest prices being noted historically ...
Tuesday, 13 December 16
COAL DEMAND GROWTH TO STALL AS APPETITE WANES, ACCORDING TO IEA
Growth in global coal demand will stall over the next five years as the appetite for the fuel wanes and other energy sources gain ground, according ...
Monday, 12 December 16
U.S. WEEKLY COAL PRODUCTION TOTALS 16.3 MMST, UP 7.4% - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.3 million short ton ...
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- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Central Java Power - Indonesia
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- GMR Energy Limited - India
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Kideco Jaya Agung - Indonesia
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Pendopo Energi Batubara - Indonesia
- Malabar Cements Ltd - India
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Energy Development Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Cement Manufacturers Association - India
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Marubeni Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
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