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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, 09 February 15
Q2' CFR SOUTH CHINA COAL SWAP DECLINED 3.28% TO $ 56.92 W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 1.93 (-3.28%) per MT month over month and US$ 0.10 (-0 ...
Sunday, 08 February 15
BDI FELL CONTINUOUSLY HIT A THREE DECADES LOW
COALspot.com: This week Baltic Exchange Dry Freight Index (BDI) fell continuously hit a three decades low.
The BDI continuously fell and was d ...
Friday, 06 February 15
WEEKLY U.S. COAL PRODUCTION UP AN ESTIMATED 1.1% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 20.1 million short tons (mmst) of coal ...
Friday, 06 February 15
SHIP DAMAGED BY FIRE CAUSED BY PIRATES FOUND TO BE CONSTRUCTIVE TOTAL LOSS - TAYLOR WESSING
KNOWLEDGE TO ELEVATE
The High Court was asked to determine a number of preliminary issues, including whether a vessel was a constructive total ...
Thursday, 05 February 15
BDI HAS NOW FALLEN A LEVEL CLOSE TO THE INDEX'S HISTORIC LOW - INTERMODAL
They say a picture is worth a thousand words and in this instance just one look at the tables above is enough to understand the great pressure the ...
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- Toyota Tsusho Corporation, Japan
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Petron Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Kohat Cement Company Ltd. - Pakistan
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Gujarat Sidhee Cement - India
- Larsen & Toubro Limited - India
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- Orica Mining Services - Indonesia
- Georgia Ports Authority, United States
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- Maharashtra Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Sarangani Energy Corporation, Philippines
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- The State Trading Corporation of India Ltd
- Borneo Indobara - Indonesia
- The University of Queensland
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- Australian Coal Association
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- White Energy Company Limited
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Star Paper Mills Limited - India
- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
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