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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, 10 April 15
US COAL PRODUCTION FELL 4.7% W-O-W : EIA
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 17.4 million short ...
Friday, 10 April 15
DRY BULK MARKET'S DOWNFALL ALSO OFFER INVESTMENT BARGAINS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Dry bulk market rates have fallen to historical lows over the past few weeks, with no clear path of recovery, at least in the near term. As such, m ...
Thursday, 09 April 15
CAPESIZE: RATES ARE STILL DISAPPOINTING - FEARNLEYS
Handy
The handy market had a stronger sentiment before the Easter holidays, but have as the bigger panamaxes seen a softening tendency this week. ...
Wednesday, 08 April 15
DRY BULK MARKET SEEMS UNABLE TO CATCH A BREAK - INTERMODAL
COALspot.com: The Dry Bulk market seems unable to catch a break these days.
According to Intermodal, following the market stabilization that p ...
Wednesday, 08 April 15
CHINA BURNS HALF OF THE WORLD'S COAL - CHRISTOPHER T. WHITTY
Intermodal Weekly Market Update
China is the world's largest consumer of coal, using more coal each year than the United States, the Europ ...
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- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Independent Power Producers Association of India
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Karaikal Port Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Meralco Power Generation, Philippines
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Economic Council, Georgia
- The Treasury - Australian Government
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- Standard Chartered Bank - UAE
- VISA Power Limited - India
- Minerals Council of Australia
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Trasteel International SA, Italy
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Xindia Steels Limited - India
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Bulk Trading Sa - Switzerland
- Indonesian Coal Mining Association
- Posco Energy - South Korea
- Interocean Group of Companies - India
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Planning Commission, India
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- GN Power Mariveles Coal Plant, Philippines
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
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