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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, 16 June 14
API 8 CFR SOUTH CHINA COAL SWAPS FALL CONTINUES THIS PAST WEEK
COALspot.com: API 8 CFR South China Coal swaps for average Q3 14 deliveries lost 4.34 percent month on month and closed at US$ 71.05 per mt a ...
Sunday, 15 June 14
COAL FREIGHT RATES FALL FURTHER ON LACK OF DEMANDS - CAPT. REDDY
COALspot.com: The BDI softened this week as all segments fell this week. The Panamax sector being most affected. The Cape index was down 3.51 pct w ...
Friday, 13 June 14
US COAL PRODUCTION FELL 3% IN WEEK THAT ENDED JUNE 7, SAYS EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 18.6 million short tons (mmst) of coal in a ...
Friday, 13 June 14
DRY BULK MARKET KEEPS ON FALLING, DESPITE RESPITE OF THE CAPESIZE SECTOR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on its lacklustre performance overall, with the Baltic Dry Index (BDI) still hovering below the 1,000 point mark. Yest ...
Thursday, 12 June 14
INDONESIA SETS HBA FOR MONTH OF JUNE AT US$ 73.64
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has revised up first time in last four months the coal bench mark price. ...
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- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- Indo Tambangraya Megah - Indonesia
- Indian Energy Exchange, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- The University of Queensland
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- PNOC Exploration Corporation - Philippines
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sical Logistics Limited - India
- GMR Energy Limited - India
- SN Aboitiz Power Inc, Philippines
- MS Steel International - UAE
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Economic Council, Georgia
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Ministry of Finance - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Ministry of Mines - Canada
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