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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, 12 October 16
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Wednesday, 12 October 16
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Monday, 10 October 16
INDONESIAN COAL PRICE REFERENCE HITS HIGHEST LEVELS SINCE SEPTEMBER 2014
COALspot.com: The Indonesia coal benchmark price hits to its highest level since September 2014. The government declared benchmark prices for Indon ...
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THE FREIGHT MARKET FIRMS UP ON STRONG CAPE PERFORMANCE
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose again and ending in a positive note this past week. ...
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- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- LBH Netherlands Bv - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Anglo American - United Kingdom
- The University of Queensland
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- Agrawal Coal Company - India
- Goldman Sachs - Singapore
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Australian Coal Association
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- Minerals Council of Australia
- Global Green Power PLC Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
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