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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, 13 July 15
THE DRY BULK MARKET CLOSED ON A POSITIVE TONE THIS PAST WEEK
COALspot.com: Despite Greece crisis and turmoil in the stock market across the world , the freight market overall was firm and up in all segments t ...
Sunday, 12 July 15
SHIPYARD NOT LIABLE FOR ENGINE ROOM FIRE CAUSED BY OIL LEAKAGE - BIRCH WINDAHL
KNOWLEDGE TO ELEVATE
A Danish vessel owner requested a Danish shipyard to undertake repairs and maintenance works on its vessel. An agreement ...
Saturday, 11 July 15
MAJOR IRANIAN GAS EXPORTS WILL TAKE AT LEAST FIVE YEARS - FITCH
Iran has the long-term potential to become one of the world's top gas producers, thanks to its 34 trillion cubic meters (tcm) of natural gas re ...
Friday, 10 July 15
DRY BULK MARKET KEEPS POSITIVE MOMENTUM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept its positive momentum over the course of the past few days, thanks to Panamax gains. During yesterday’s session ...
Friday, 10 July 15
U.S PRODUCED APPROXIMATELY TOTALED AN ESTIMATED 14.1 MMST WEEK OVER WEEK - EIA
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 14.1 million short ...
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- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Indonesian Coal Mining Association
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- MS Steel International - UAE
- Deloitte Consulting - India
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- South Luzon Thermal Energy Corporation
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- Australian Commodity Traders Exchange
- Kepco SPC Power Corporation, Philippines
- Ministry of Transport, Egypt
- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Bhoruka Overseas - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Australian Coal Association
- Eastern Coal Council - USA
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Toyota Tsusho Corporation, Japan
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Lanco Infratech Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- Cement Manufacturers Association - India
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Siam City Cement PLC, Thailand
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Parliament of New Zealand
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Mercator Lines Limited - India
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- Meralco Power Generation, Philippines
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- ICICI Bank Limited - India
- White Energy Company Limited
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
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