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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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Tuesday, 24 February 15
IHS ENERGY COAL CONFERENCE OF THE AMERICAS
Attend the IHS Energy Coal Conference of the Americas 17-19 March in Cartagena, Colombia and learn about timely concerns in today's coal indust ...
Monday, 23 February 15
Q2' CFR SOUTH CHINA COAL SWAP FOR Q2 ROSE 3.39% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery rose US$ 1.90 (+3.39%) per MT month over month and declined US$ 0.08 ...
Monday, 23 February 15
Q2' API 5 FOB NEWCASTLE COAL SWAP CLOSED $1 HIGHER THAN Q3
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.12 per MT (+6.44%) month over month and fall US$ 0.43 (-0.83%) w ...
Sunday, 22 February 15
THE BALTIC DRY INDEX LOST ALMOST 3.2% OR 17 POINTS WEEK ON WEEK
COALspot.com: The Baltic Dry Index, one of the economic indicators that monitors the health of the world's economy by tracking the price of shi ...
Friday, 20 February 15
GOVT SET TO INCREASE COAL OUTPUT TARGET THIS YEAR - JAKARTA POST
The Energy and Mineral Resources Ministry is planning to increase its coal output target this year as the government seeks to offset the ongoing de ...
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- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- Kumho Petrochemical, South Korea
- European Bulk Services B.V. - Netherlands
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Kaltim Prima Coal - Indonesia
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Global Business Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Videocon Industries ltd - India
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Billiton Holdings Pty Ltd - Australia
- Australian Coal Association
- PTC India Limited - India
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- London Commodity Brokers - England
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- Directorate Of Revenue Intelligence - India
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Eastern Energy - Thailand
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- MS Steel International - UAE
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- Latin American Coal - Colombia
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
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