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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, 19 October 14
LOW DEMAND PUSHES DOWN COAL FREIGHT RATES; VOLATILITY CONTINUES
COALspot.com: This week all the segments softened including BDI except for Panamax index.
The BDI was down by1.70 pct and clsoed at 944 points ...
Friday, 17 October 14
INTERNATIONAL COAL PRICES ARE AT LOWEST LEVEL; COAL STOCKS AT INDIAN POWER PLANTS ARE ALSO AT LOWEST LEVEL
International coal prices as well as coal freights are falling and reaching to its lowest levels. According to PTI, fuel stockpiles at the thermal ...
Friday, 17 October 14
U.S. COAL PRODUCTION UP BY 3.6% WEEK - ON - WEEK
COALspot.com – United States the world's one of largest coal producers, produced approximately 19.20 million short tons (mmst) of coal in ...
Friday, 17 October 14
DRY BULK SHIPPING'S OUTLOOK NOW SHIFTING TO A LESS PROMISING ONE, SHIP PRICES EXPECTED TO FOLLOW SOON - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
China’s and other Asian countries’ return to the dry bulk market last week, didn’t trigger the hoped support towards the dry bulk ...
Thursday, 16 October 14
KOREA MIDLAND POWER TO BUY 490K MT OF LCV COAL FOR 1Q 2015
COALspot.com : Korea Midland Power Co., Ltd. has invited bids through International open bidding for 490,000 Metric Tons (MT) of LCV (Sub) Bitumino ...
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- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Minerals Council of Australia
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Planning Commission, India
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Electricity Generating Authority of Thailand
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Heidelberg Cement - Germany
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Wilmar Investment Holdings
- Marubeni Corporation - India
- Posco Energy - South Korea
- Renaissance Capital - South Africa
- Parliament of New Zealand
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Borneo Indobara - Indonesia
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Mineral Development Corp Ltd - India
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Bayan Resources Tbk. - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Sarangani Energy Corporation, Philippines
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- Semirara Mining Corp, Philippines
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- India Bulls Power Limited - India
- Ministry of Mines - Canada
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