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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, 20 July 16
EDIBLE OIL MARKETS ACROSS THE GLOBE REMAIN UNDER PRESSURE - STELIOS KOLLINTZAS
The edible oil markets across the globe remain under pressure on the back of lackluster demand. Some of the main factors causing the low activity a ...
Tuesday, 19 July 16
INDONESIAN THERMAL COAL INDEXES CONTINUALLY FIRM UP ON ROBUST BUYING INTEREST - CS COAL INDEX
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose One percent week over week to averaging $40.38 per ton this past week, shows CS ...
Monday, 18 July 16
FROM PIT TO PORT: DRY BULK NEEDS A NEW PATH TO PROFITABILITY - TOC EUROPE
During the golden years for commodities, from 2005 to 2014, high demand and big profit margins pushed companies to produce more and more, sacrifici ...
Monday, 18 July 16
BALTIC DRY INDEX REMAIN FIRM, UP BY 5.97 WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to remain firm with all segments ending in posi ...
Friday, 15 July 16
US COAL PRODUCTION DOWN 8.4% WEEK-OVER-WEEK
COALspot.com – U.S, world’s second largest coal producers has produced approximately totalled an estimated 12.9 million short tons (mms ...
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- Billiton Holdings Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Energy Link Ltd, New Zealand
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
- Antam Resourcindo - Indonesia
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- VISA Power Limited - India
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- GMR Energy Limited - India
- Agrawal Coal Company - India
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- Australian Coal Association
- Minerals Council of Australia
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- ICICI Bank Limited - India
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
- Dalmia Cement Bharat India
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
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