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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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Friday, 12 December 14
U.S WEEKLY COAL PRODUCTION UP 3.4% W/E DECEMBER 6
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.6 million short tons (mmst) of coal ...
Wednesday, 10 December 14
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS, INTERMODAL
COALspot.com: As 2014 is coming to an end, we look back to what has happened during the year and notice that SnP activity has been particularly sof ...
Wednesday, 10 December 14
WORLD HARD COAL MARKET 2014: PRODUCTION AND TRADE STAGNATING, IMPORTS TO GERMANY AND EUROPE ON THE DECLINE
Press Release: German Coal Importers Association (VDKi) criticizes regulations ordering reduction of CO2 emissions from coal-fired power plants as ...
Tuesday, 09 December 14
PRESSURE ON CHINA COAL MINERS TO CONTINUE DESPITE GOVERNMENT SUPPORT - FITCH
COALspot.com: Fitch Ratings says that Chinese coal mining companies will continue to be pressured by low prices, which will persist despite recent ...
Tuesday, 09 December 14
Q4' 2015, FOB INDONESIA COAL SWAP CLOSED AT $ 49.02 W/E 5 DEC
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, week over week and day on day.
The Q1 swap has lost US$ 0.2 ...
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- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Maharashtra Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- SMG Consultants - Indonesia
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- Coalindo Energy - Indonesia
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Minerals Council of Australia
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- ASAPP Information Group - India
- Karaikal Port Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- PTC India Limited - India
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Commonwealth Bank - Australia
- Australian Coal Association
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
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