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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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Monday, 25 August 14
API 8 CFR SOUTH CHINA COAL SWAP GAINED DAY OVER DAY AND MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for delivery in September 2014 increased US$ 0.30 (+0.44%) day on day and decreased US$ 0.20 (- ...
Sunday, 24 August 14
SEA FREIGHT MARKETS STARTING TO LOOK POSITIVE; CAPES DRIVE FREIGHTS HIGHER
COALspot.com: The freight market has strengthen further this week with BDI up 7.19 pct week on week. The BDI was closed at 1,088 points while the B ...
Friday, 22 August 14
INDIAN IRON ORE ROYALTY RISE NOT LIKELY TO HURT STEELMAKERS' MARGINS - FITCH
Fitch Ratings does not expect an increase in India's iron ore royalty rates to have a major impact on the profitability of steel producers in t ...
Friday, 22 August 14
ARBITRATION CLAUSE IN LOU HELD TO REPLACE CHARTERPARTY ARBITRATION CLAUSE
KNOWLEDGE TO ELEVATE
The Claimants had claims for cargo damage against the vessel Owners arising under four bills of lading. The vessel was th ...
Friday, 22 August 14
ICAP ENERGY LAUNCHES GLOBAL COKING COAL DERIVATIVES TRADING
First contract completed and cleared on CME
COALspot.com: ICAP Energy, the energy business of ICAP plc, announces today that it has successful ...
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- Ministry of Transport, Egypt
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- Jaiprakash Power Ventures ltd
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- PTC India Limited - India
- VISA Power Limited - India
- Goldman Sachs - Singapore
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Port Waratah Coal Services - Australia
- Planning Commission, India
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Intertek Mineral Services - Indonesia
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- The Treasury - Australian Government
- India Bulls Power Limited - India
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
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