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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, 14 November 14
U.S. WEEKLY COAL OUTPUT SLIPS SLIGHTLY WEEK ENDING NOVEMBER 08
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
Friday, 14 November 14
MORE NATURAL GAS FROM RUSSIA TO HELP STABILISE CHINA PRICES - FITCH RATINGS
COALspot.com: Fitch Ratings has said possible additional natural gas supplies from Russia's OAO Gazprom to China via the Altai pipeline would h ...
Thursday, 13 November 14
SLOWER AND LOWER HAS BEEN THE TREND OF THE PANAMAX IN BOTH HEMISPHERES - FEARNLEYS
Handy
We are experiencing an oversupply of tonnage in the Atlantic which is out numbering the amount of cargoes, Fearnleys broker says in its lat ...
Thursday, 13 November 14
DRY BULK MARKET'S REBOUND HINGES ON IRON ORE OVERSUPPLY ISSUES MOVING FORWARD - HELLENIC SHIPPING NEWS
“One man’s benefit, is another man’s demise” is a phrase which can be used to describe today’s situation in the dry b ...
Thursday, 13 November 14
COAL MINISTER WANTS INDIA TO STOP COAL IMPORTS IN TWO OR THREE YEARS
COALspot.com: India to ramp up coal production to a billion tonnes by 2019 from its current level of 490 million tones. According to Power and Coal ...
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- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining and Power Corporation, Philippines
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Cement Manufacturers Association - India
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- Deloitte Consulting - India
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Power Finance Corporation Ltd., India
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- The University of Queensland
- Renaissance Capital - South Africa
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Transport, Egypt
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Global Business Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
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