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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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Tuesday, 03 May 16
HOW TO AVOID THE LATEST CARGO FRAUDS - BIMCO
BIMCO receives regular reports from members around the world about cargo fraud. This week alone we have had two reports of cargoes being fixed (or ...
Monday, 02 May 16
INDIA'S GANGAVARAM PORT SETS ALL INDIA RECORD FOR NON-COKING COAL DISCHARGE
COALspot.com: Gangavaram Port, the deepest and the most modern port in India, has created yet another historical milestone record by discharging 15 ...
Monday, 02 May 16
CS (I) 5000 GAR COAL INDEX CLOSES 0.11% HIGHER, 5700 GAR COAL RISES 0.07% W/W
COALspot.com: Average 5000 GAR coal index of Indonesian origin up 0.28 percent week over week to averaging $38.78 per ton on this past Friday, acco ...
Monday, 02 May 16
FREIGHT RATES ARE EXPECTED TO BE FLAT TO SOFT THIS WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
Saturday, 30 April 16
40 YEARS OF HANDLING COAL AT THE BTW IN WILHELMSHAVEN UNDER THE RHENUS FLAG
Press Release: The first bulk carrier with coal on board docked at the Bulk Terminal Wilhelmshaven (BTW), which is operated by Rhenus Midgar ...
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- Electricity Generating Authority of Thailand
- Orica Mining Services - Indonesia
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Australian Coal Association
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Karbindo Abesyapradhi - Indoneisa
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- Georgia Ports Authority, United States
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- ICICI Bank Limited - India
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Essar Steel Hazira Ltd - India
- Orica Australia Pty. Ltd.
- Semirara Mining and Power Corporation, Philippines
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- Heidelberg Cement - Germany
- Power Finance Corporation Ltd., India
- Oldendorff Carriers - Singapore
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Banpu Public Company Limited - Thailand
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Larsen & Toubro Limited - India
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Tata Chemicals Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
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