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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, 12 September 16
THE CAPE MARKET HAS GAINS ON WEEK; THE CAPE INDEX SETTLING AT 1566 POINTS ON FRIDAY
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose and ending in a positive note this past week. The BD ...
Friday, 09 September 16
U.S. WEEKLY COAL OUTPUT DECLINED SLIGHTLY TO 16.1 MMST, EIA SAYS
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.1 million short ton ...
Friday, 09 September 16
CAPESIZE: THE SENTIMENT IS SOLID, SAYS FEARNLEYS
Supramax
A quiet start with Labour Day celebrations in the United States leading to very little being reported from the Atlantic basin. Supramaxe ...
Thursday, 08 September 16
U.S. COAL EXPORTS IN JUNE 2016 UP 29% COMPARED TO MAY 2016, SAYS EIA
U.S. coal production in August was 71 million short tons (MMst), which is 6 MMst (9%) higher than in the previous month and 12 MMst (14%) lower tha ...
Wednesday, 07 September 16
WEEKLY MARKET (TANKER) REPORT - INTERMODAL
What goes around comes around! The Shipping industry is infamous for its seasonality and cyclicality and the tanker sector is no exception to these ...
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- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Intertek Mineral Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Chamber of Mines of South Africa
- MS Steel International - UAE
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Chettinad Cement Corporation Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- The University of Queensland
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
- Ministry of Mines - Canada
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Romanian Commodities Exchange
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Larsen & Toubro Limited - India
- LBH Netherlands Bv - Netherlands
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Cement Manufacturers Association - India
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- Heidelberg Cement - Germany
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- Semirara Mining and Power Corporation, Philippines
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- CNBM International Corporation - China
- Planning Commission, India
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
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