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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, 18 May 15
FOB NEWCASTLE COAL SWAPS SCORE MONTHLY GAINS
COALspot.com: API 5 FOB Newcastle Coal swap for Q3’ 2015 delivery gained US$ 0.87 per MT (1.99%) month over month and lost US$ 0.03 week on w ...
Monday, 18 May 15
Q1' 16 API 8 CFR SOUTH CHINA COAL SWAP CLOSED HIGHER THAN Q3' 15 CLOSING PRICE
COALspot.com: API 8 CFR South China Coal swap for Q3’ 2015 delivery up US$ 1.05 (2.10%) per MT month over month and US$ 0.53 (1.05%) pe ...
Sunday, 17 May 15
INDONESIA - INDIA FREIGHTS RATES EXPECTED TO FLAT TO SOFT NEXT WEEK
COALspot.com: The BDI was up by 10.45% and closed at 634 points week on week, while the Cape index saws big jump or up almost 55% for the same peri ...
Friday, 15 May 15
DRY BULK AND CONTAINER SHIPPING TO REMAIN WEAK, OUTLOOK FOR PORTS AND TANKERS POSITIVE - DREWRY MARITIME EQUITY RESEARCH
Global economy is in a gradual recovery mode, sending mixed signals to investors. Chinese economic data continues to remain weak as economy transit ...
Friday, 15 May 15
COAL PRODUCTION IN U.S DOWN 1.4 MILLION TONS FOR THE WEEK ENDING MAY 8
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 16.0 million short ...
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- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Economic Council, Georgia
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- SMC Global Power, Philippines
- Meralco Power Generation, Philippines
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Africa Commodities Group - South Africa
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Australian Coal Association
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
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