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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, 02 November 14
CAPE INDEX WAS UP 46.65% WEEK ON WEEK
COALspot.com: The BDI and Cape index continued the strong upward trend this week. The BDI was up 19.80 pct and Cape index was up by 46.65 per ...
Friday, 31 October 14
BUKIT ASAM'S NET PROFIT ROSE 27.42% FOR THE PERIOD JANUARY - SEPTEMBER 2014
COALspot.com: Publicly listed coal miner Bukit Asam reported solid profits in the first nine months of 2014 year.
Coal miner Bukit Asam manage ...
Friday, 31 October 14
U.S PRODUCED AROUND 19.3 MMST OF COAL IN A WEEK
COALspot.com – United States the world's one of largest coal producers, produced approximately 19.3 million short tons (mmst) of coal in ...
Thursday, 30 October 14
COAL & GRAINS SUPPORT PANAMAX AND IRON ORE SUPPORTS CAPES
Handy
The Atlantic market has been flat this week. Rates are up about US$ 200 from last week on the TA´s, but the volumes are about the sam ...
Thursday, 30 October 14
DOES A LOU ARBITRATION AGREEMENT FOR THE UNDERLYING CARGO CLAIM COMPLETELY REPLACE THE BILL OF LADING ARBITRATION CLAUSE? - INCE &CO
KNOWLEDGE TO ELEVATE
In the context of cargo claims brought under four bills of lading, the Commercial Court has recently considered whether a ...
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- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bayan Resources Tbk. - Indonesia
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- Wilmar Investment Holdings
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Wood Mackenzie - Singapore
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- White Energy Company Limited
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- Standard Chartered Bank - UAE
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Energy Link Ltd, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Meralco Power Generation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Kapuas Tunggal Persada - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
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