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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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Thursday, 19 November 15
CHINA STEEL PRODUCTION CAPACITY TO PEAK IN 2016 - FITCH RATINGS
COALspot.com: Fitch Ratings today says that China's steel production capacity is likely to peak in 2016, with capacity elimination over the nex ...
Thursday, 19 November 15
Q3' 16 RICHARDS BAY COAL SWAP CLOSED 9% LOWER THAN Q1' 16 DELIVERY PRICE
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q1’ 2016 up week over week and month over month.
The Q1’ 2016 swa ...
Thursday, 19 November 15
RATES FOR CAPES KEPT MOVING SOUTH - INTERMODAL
COALspot.com: With the BDI currently standing at less than 30 points above the historical lows marked in February this year and with activity acros ...
Wednesday, 18 November 15
MARKET (SHIPPING) INSIGHT - THEODORE NTALAKOS
Supply VS Demand
According to data from the IMF, global growth for 2015 is projected at 3.1 percent, 0.3 percentage point lower than in 2014, ...
Tuesday, 17 November 15
KOMIPO INVITES BIDS FOR (SEMI) ANTHRACITE COAL FOR SEOCHEON POWER PLANT
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender for 70,000 Metric Tons of (Semi) Anthracite for Ja ...
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- Malabar Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Posco Energy - South Korea
- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
- Indian Oil Corporation Limited
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- The University of Queensland
- CIMB Investment Bank - Malaysia
- MS Steel International - UAE
- Mercator Lines Limited - India
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- White Energy Company Limited
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Kepco SPC Power Corporation, Philippines
- Minerals Council of Australia
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Port Waratah Coal Services - Australia
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- Pipit Mutiara Jaya. PT, Indonesia
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Deloitte Consulting - India
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Semirara Mining Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
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