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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, 26 January 16
Q3'16 CFR SOUTH CHINA COAL SWAP DROPPED BELOW $41 A TON
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery rose US$ 0.82 (1.94%) per ton month over month.
A commodity swap is ...
Tuesday, 26 January 16
OUTLOOK FOR GLOBAL OIL MARKETS - OPEC SECRETARY GENERAL
Opening address by HE Abdalla S. El-Badri, OPEC Secretary General, at the Chatham House Conference: Middle East and North Africa Energy 2016, Theme ...
Monday, 25 January 16
5700 GAR COAL INDEX CLOSED $ 50.08 PER TON, $0.20 LOWER FROM LAST WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline 1.35 percent week over week to averaging $39.39 per ton on this past Friday, ...
Monday, 25 January 16
SHOULD A DEFAULTING PARTY BE ENTITLED TO AN INNOCENT PARTY'S SAVING, FOLLOWING THEIR BREACH OF CONTRACT? - THE NEW FLAMENCO REVISITED
KNOWLEDGE TO ELEVATE
This case was addressed by the club in our of January 2015, when the High Court decision became available. The background ...
Monday, 25 January 16
DRY BULK SHIPPING: A MISERABLE START TO A NEW YEAR, WHERE THE MARKET STRUGGLES TO GROW AT ALL - BIMCO
The global production of steel dropped in 2015 compared to 2014, to a larger extent outside China, as China exported its surplus of steel to destin ...
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- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Planning Commission, India
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Krishnapatnam Port Company Ltd. - India
- Gujarat Sidhee Cement - India
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Straits Asia Resources Limited - Singapore
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