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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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Wednesday, 15 July 15
SAS TO BUILD 108 KM ROAD FOR COAL IN JAMBI, SAYS JAKARTA POST
Jambi Governor Hasan Basri Agus said on Sunday that mining company PT Sinar Anugerah Sukses (SAS) would develop a 108-kilometer road with a width o ...
Wednesday, 15 July 15
ANY FUTURE IRAN OIL DEAL WILL BOOST SUPPLY FUNDAMENTALS WITH TANKER OWNERS HOPING FROM TEHRAN TO QUICKLY BOOST ITS PRODUCTION
With the Greek “Euro-drama” apparently over, at least for now, Iran’s oil deal still remains elusive, with any potential agreemen ...
Tuesday, 14 July 15
FOB NEWCASTLE COAL SWAPS MAINTAIN OVERALL NEGATIVE TONE THIS PAST WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q3’ 2015 delivery down $ 1.02 per MT (-2.23%) month over month to US$ 44.68 per mt. The swap ...
Tuesday, 14 July 15
CFR SOUTH CHINA COAL SWAPS DECLINE THIS PAST WEEK
COALspot.com: API 8 CFR South China Coal swap for Q3’ 2015 delivery declined US$ 1.47 (2.82%) per MT month over month.
A commodity swap ...
Monday, 13 July 15
THERMAL COAL IMPORTS SOAR 23 PER CENT TO 24.08 MILLION TONNES AT 12 MAJOR INDIAN PORTS
Import of thermal coal jumped 23 per cent to 24.08 million tonnes at 12 major ports in the first quarter of the fiscal, even as the government cont ...
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- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- The University of Queensland
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Australian Coal Association
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- VISA Power Limited - India
- PTC India Limited - India
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- GVK Power & Infra Limited - India
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Banpu Public Company Limited - Thailand
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Ministry of Finance - Indonesia
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- GMR Energy Limited - India
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
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