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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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Sunday, 23 November 14
ITALY'S STEAM COAL IMPORTS TO DROP BY 11% IN 2014 - ASSOCARBONI
COALspot.com: Italy’s steam coal imports expected to drop to 16 million tons in 2014 (-11% compared to 2013); coking coal imports to plunge t ...
Saturday, 22 November 14
THE FALL IN BUNKER PRICES REDUCE FUEL COSTS SIGNIFICANTLY - BIMCO, PETER SAND
For a ship that burns 24 tonnes of fuel per day while steaming, fuel costs are reduced by as much as USD 1 million a year if current price level st ...
Saturday, 22 November 14
DRY BULKERS NEWBUILDING DELIVERIES REACHED 11.8 MILLION DWT DURING THIRD QUARTER, NET FLEET GROWTH FOR 2014 TO REACH 5% - HELLENIC SHIPPING NEWS
The dry bulk market has rebounded since its less than impressive performance since the start of the year, but overall, third quarter figures could ...
Friday, 21 November 14
BUMI ENTERS INTO CONDITIONAL SALE & PURCHASE AGREEMENT TO SELL FBS STAKE
COALspot.com: PT Bumi Resources Tbk, one of the Indonesia's largest coal producers confirms that it has executed a Conditional Sale and Purchas ...
Friday, 21 November 14
U.S LAST WEEK'S COAL PRODUCTION STAYS FLAT W-O-W
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
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- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Therma Luzon, Inc, Philippines
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Borneo Indobara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Thai Mozambique Logistica
- Wilmar Investment Holdings
- Mjunction Services Limited - India
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Cement Manufacturers Association - India
- Meralco Power Generation, Philippines
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- Parliament of New Zealand
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- PNOC Exploration Corporation - Philippines
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- Straits Asia Resources Limited - Singapore
- Price Waterhouse Coopers - Russia
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- Tamil Nadu electricity Board
- Trasteel International SA, Italy
- MS Steel International - UAE
- Chamber of Mines of South Africa
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Petron Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- The University of Queensland
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
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