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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, 29 December 14
SGX'S FOB NEWCASTLE COAL SWAPS IMPROVED W-O-W, LOST M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.44 per MT (-2.73%) month over month and gained US$ 0.36 (+0.71%) ...
Friday, 26 December 14
SHIPS FACE LOWER SULPHUR FUEL REQUIREMENTS IN EMISSION CONTROL AREAS FROM 1 JANUARY 2015 - IMO
Ships trading in designated emission control areas will have to use on board fuel oil with a sulphur content of no more than 0.10% from 1 January 2 ...
Wednesday, 24 December 14
CAPE DEMAND WAS STILL EXTREMELY SOFT THIS PAST WEEK ACROSS BOTH BASINS - INTERMODAL
COALspot.com: The performance of the Dry Bulk market, which found itself in desperate search of support for yet another week, has left very little ...
Wednesday, 24 December 14
MARKET INSIGHT - JOHN N. COTZIAS, INTERMODAL SNP BROKER
The year is coming to an end, and we should be able to assess if this was a good year, a bad year, or even a lousy one? The answer clearly de ...
Tuesday, 23 December 14
Q1'15 FOB INDONESIA COAL SWAP GAINED 48 CENTS IN ONE WEEK
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and gained week over week and day on day.
The Q1 swap has lo ...
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- Jaiprakash Power Ventures ltd
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Economic Council, Georgia
- White Energy Company Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- MS Steel International - UAE
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
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- Power Finance Corporation Ltd., India
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
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- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Trasteel International SA, Italy
- VISA Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
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- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- The University of Queensland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- PTC India Limited - India
- Ministry of Transport, Egypt
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- India Bulls Power Limited - India
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- The Treasury - Australian Government
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Kobexindo Tractors - Indoneisa
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
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