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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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Sunday, 24 January 16
PANAMAX MARKET WEAKENS ACROSS THE BOARD
COALspot.com: The Baltic Dry Index, which gauges the cost of shipping dry bulk including iron ore, cement, grain, coal and fertiliser, fell ninetee ...
Friday, 22 January 16
WEEKLY US COAL PRODUCTION ESTIMATES ALMOST FLAT
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.3 million shor ...
Friday, 22 January 16
COAL PRICES TO REMAIN UNDER PRESSURE THIS YEAR
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month on month and week over week. The falling trend of prices for coal was continuing ...
Friday, 22 January 16
Q3' 16 FOB RICHARDS BAY COAL SWAP CLOSED AT $ 40.80; DECLINE $ 2.80 M-O-M
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap up month over month and decline week over week.
The Q1’ 2016 FOB Richards B ...
Wednesday, 20 January 16
Q3'16 FOB NEWCASTLE COAL SWAP CLOSED $ 2.40 LESSER THAN Q1'16 CLOSING PRICE OF $ 38.10
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery rose another $0.77 per ton (2.06%) this past week compared to the sam ...
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- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
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- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
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- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- Planning Commission, India
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- Mintek Dendrill Indonesia
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- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
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- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
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- International Coal Ventures Pvt Ltd - India
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Mercator Lines Limited - India
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- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- San Jose City I Power Corp, Philippines
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- Electricity Generating Authority of Thailand
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
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- Australian Commodity Traders Exchange
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
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- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- McConnell Dowell - Australia
- The University of Queensland
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Timah Investasi Mineral - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- PTC India Limited - India
- London Commodity Brokers - England
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- CNBM International Corporation - China
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Merrill Lynch Commodities Europe
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Mines - Canada
- Australian Coal Association
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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