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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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Thursday, 19 March 15
HANDY: INDO COAL CARGOS DESTINED FOR INDIA BEING FIXED IN REGION OF $ 7-8K - FEARNLEYS
Handy
The Handy and Supra market has had a week with mixed signals. Although we see more activity in both hemispheres the rates are only up about ...
Thursday, 19 March 15
INDONESIAN COAL BENCHMARK SOAR 7.69% IN MARCH....!!!
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised up Indonesian coal benchmark prices to US$ 67.76 per MT in March ...
Wednesday, 18 March 15
AVERAGE RATE FOR CAPES MOVED TO BELOW $ 4K/DAY LAST WEEK - INTERMODAL
COALspot.com: The even heavier losses noted in the Capesize segment last week, denied the Dry Bulk market a third weekly positive, while the smalle ...
Wednesday, 18 March 15
PARKING THE CAPES - LINOS KOGEVINAS
It is no secret that recent times have been anything but kind towards shipping, and no sector has suffered more lately than the dry bulk one. While ...
Wednesday, 18 March 15
CHINA-OWNED SHIPS: A RAPID RISE TO BECOME ONE OF THE WORLD'S LARGEST FLEETS - RICHARD SCOTT
Ships operated by owners based in China have become increasingly prominent on the world’s sea routes. China-owned container ships, bulk carri ...
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- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- London Commodity Brokers - England
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- The State Trading Corporation of India Ltd
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Pipit Mutiara Jaya. PT, Indonesia
- Bangladesh Power Developement Board
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
- PTC India Limited - India
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Ambuja Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Lanco Infratech Ltd - India
- The University of Queensland
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- MS Steel International - UAE
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
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