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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, 30 March 15
WORST IS OVER FOR THE DRY BULK MARKET, BUT THE PAIN WILL REMAIN FOR YEARS TO COME, SAYS BIMCO CHIEF ANALYST - HELLENIC SHIPPING
The current demise of the dry bulk market isn’t one to go away anytime soon. That doesn’t mean that it can’t improve, with all sh ...
Monday, 30 March 15
Q3' 15 CFR SOUTH CHINA COAL SWAP: DECLINED 8.7% M-M; 12.77% Y-TO-D
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 5.00 (-8.70%) per MT month over month and US$ 1.33 (-2 ...
Monday, 30 March 15
Q2' FOB NEWCASTLE COAL SWAP CLOSED 4.47% HIGHER THAN Q4' CLOSING PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 5.42 per MT (-10.43%) month over month and US$ 1.60 (-3.32%) w ...
Sunday, 29 March 15
INDO - INDIA: SUPRAMAX & PANAMAX FREIGHT MARKET STEADY
COALspot.com: The freight market was almost stable as all segments slightly up except Panamax sector.
The BDI was up by just 0.85% week over w ...
Saturday, 28 March 15
IS NORTHERN EUROPE THE NEW MINING ELDORADO?
The Europe Mining 2015 Summit, organised by Global Summits organizer IRN on 17-18 June in Amsterdam, The Netherlands, will gather senior level repr ...
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- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- Medco Energi Mining Internasional
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- SMG Consultants - Indonesia
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- The Treasury - Australian Government
- London Commodity Brokers - England
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- South Luzon Thermal Energy Corporation
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- Marubeni Corporation - India
- Central Electricity Authority - India
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
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