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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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Friday, 07 October 16
INDONESIA'S DEMAND FOR COAL REMAINS STRONG: BP
Indonesia's domestic demand for coal shows no sign of slowing down as the country is banking on its coal abundance to meet the country' ...
Friday, 07 October 16
CEYLON SHIPPING CORPORATION HAS TAKEN DELIVERY OF COAL CARRIER MV.CEYLON PRINCESS
Sri Lanka’s Ceylon Shipping Corporation (CSC) has taken delivery of its second newly built bulk carrier for the transportation of coal to pow ...
Friday, 07 October 16
U.S. YEAR-TO-DATE COAL PRODUCTION TOTALLED AN ESTIMATED 540.5 MMST; DOWN 21.9% Y-O-Y, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.7 million short ton ...
Thursday, 06 October 16
SHIPS IN PACIFIC ACHIEVE JUST ABOVE $10K DAILY FOR A BRAZIL ROUND VOYAGE - FEARNLEYS
Supramax
Slower week with limited activity due to holidays in the East. Mixed feelings within different markets, with slight downturn in Pacific ...
Wednesday, 05 October 16
OPEC TO SHUT OFF MORE THAN 6 PERCENT OF ITS PRODUCTION; MIXED FEELING AMONGST TRADERS - ALLIED
OPEC recent accord to shut off more than 6 percent of its production this past week has been met with mixed feeling amongst traders. As we mo ...
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- VISA Power Limited - India
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
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- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- Cement Manufacturers Association - India
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- Siam City Cement PLC, Thailand
- Kartika Selabumi Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Medco Energi Mining Internasional
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
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- Parliament of New Zealand
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- GMR Energy Limited - India
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- Deloitte Consulting - India
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- Tamil Nadu electricity Board
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- Planning Commission, India
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Siam City Cement - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- McConnell Dowell - Australia
- Sree Jayajothi Cements Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
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- Maheswari Brothers Coal Limited - India
- Independent Power Producers Association of India
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- TeaM Sual Corporation - Philippines
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- Indian Energy Exchange, India
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- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
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- Electricity Authority, New Zealand
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- Minerals Council of Australia
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- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
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- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Chamber of Mines of South Africa
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- Kapuas Tunggal Persada - Indonesia
- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
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- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
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- Oldendorff Carriers - Singapore
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Coalindo Energy - Indonesia
- The University of Queensland
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
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