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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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- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Medco Energi Mining Internasional
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Sical Logistics Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Indian Energy Exchange, India
- PTC India Limited - India
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- VISA Power Limited - India
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Australian Coal Association
- Baramulti Group, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Petrochimia International Co. Ltd.- Taiwan
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- Ministry of Transport, Egypt
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Indian Oil Corporation Limited
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- ASAPP Information Group - India
- GMR Energy Limited - India
- Wood Mackenzie - Singapore
- SMG Consultants - Indonesia
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
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