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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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Friday, 26 June 15
INDONESIA COAL PRODUCTION FALLS BETWEEN JAN-MAY : JG
The Ministry of Energy and Mineral Resources announced that coal production declined to 166 million tons between January and May, a 19 percent drop ...
Friday, 26 June 15
COAL PRODUCTION IN THE U.S ROSE 6.0% WEEK OVER WEEK, SAYS EIA
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 16.3 million short ...
Thursday, 25 June 15
THE PORT OF NEWCASTLE SHIPPED 13.31% MORE COAL IN MAY 2015 COMPARED TO APRIL 2015
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.18 billio ...
Thursday, 25 June 15
CAPESIZE: PERIOD INTEREST REMAINED STRONG FOR A SECOND WEEK - INTERMODAL
COALspot.com: Following those depressive last six months, the BDI closed off on last Friday noting a substantial weekly increase, which pushed the ...
Wednesday, 24 June 15
PANAMAXES: THE OUTLOOK REMAINS NEGATIVE AS DEMAND FOR COAL IS DIMINISHING - YANNIS OLZIERSKY
As we get closer to the end of June, we can safely say that the 1st half of the year is leaving the dry bulk market with a bitter taste that we all ...
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- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Parliament of New Zealand
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- Energy Link Ltd, New Zealand
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Salva Resources Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Merrill Lynch Commodities Europe
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- Therma Luzon, Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- LBH Netherlands Bv - Netherlands
- Jindal Steel & Power Ltd - India
- Videocon Industries ltd - India
- Formosa Plastics Group - Taiwan
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- The University of Queensland
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
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