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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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Monday, 05 October 15
Q1 & Q2 2016 DELIVERY SWAPS DECLINED M-M AND W-W THIS PAST WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery decreased $0.36 per ton (0.85%) month over month to US$ 42.12 per ton. The ...
Monday, 05 October 15
Q1' 16 CFR SOUTH CHINA COAL SWAP CLOSED US$ 48.05 PER TON
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down US$ 0.47 (0.96 %) per ton month over month.
A commodity swap is ...
Monday, 05 October 15
SMALL DECLINE IN 2014 SHIP OPERATING COSTS - MOORE STEPHENS
Total annual operating costs in the shipping industry fell by an average of 0.8% in 2014. This compares with the 0.3% average fall in costs recorde ...
Sunday, 04 October 15
THE INDO-INDIA FREIGHT MARKET REMAINS UNDER PRESSURE
COALspot.com: The BDI closed on Friday (2 Oct 2015) at 889 points, down by 54 points compared to previous Friday's closing ( 24 Sept 2015) of 9 ...
Friday, 02 October 15
COAL PRODUCTION IN THE UNITED STATES DECREASED THIS WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.5 million shor ...
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- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Price Waterhouse Coopers - Russia
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- London Commodity Brokers - England
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- Interocean Group of Companies - India
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- New Zealand Coal & Carbon
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- The University of Queensland
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Tamil Nadu electricity Board
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- Siam City Cement - Thailand
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Planning Commission, India
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
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