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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, 09 June 14
INDO SUB-BIT COAL SWAPS FOR Q3,Q4 OF 2014 AND Q1 2015: LOST ON DAY AND MONTH
COALspot.com: Indonesian coal swaps for average Q3’ 2014 continue last week’s trend or lost on day, week and on month according to Asia ...
Monday, 09 June 14
API 8 CFR SOUTH CHINA COAL SWAP Q3 14 DELIVERIES LOST 4.61% M-O-M
COALspot.com: API 8 CFR South China Coal swaps for average Q3 14 deliveries lost 4.61 percent month on month and closed at US$ 71.62 per mt a ...
Sunday, 08 June 14
DRY BULK MARKET RATES FOR PANAMXES TO REMAIN VOLATILE; NO IMPROVEMENTS SEEN OVER THE WEEK
COALspot.com: Cape index increase pushes BDI index to 989 points week on week. The BDI firmed up by 5.88 pct and closed at 989 points week ended 6 ...
Saturday, 07 June 14
EVERYTHING CHANGES, AND NOTHING ABIDES - HERACLITUS
A couple of weeks ago, and while everyone was focusing on the struggling freight market, Russia and China made history by signing a three-decade lo ...
Saturday, 07 June 14
FIRST BITE AT ANTI-CORRUPTION CLAUSE - BIMCO
In recent years a number of countries have introduced anti-corruption legislation which, unfortunately, fails to recognise the practical implicatio ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
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- Sinarmas Energy and Mining - Indonesia
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- MS Steel International - UAE
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
- SMG Consultants - Indonesia
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- The University of Queensland
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- London Commodity Brokers - England
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Australian Coal Association
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Tata Chemicals Ltd - India
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Thiess Contractors Indonesia
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- Energy Development Corp, Philippines
- White Energy Company Limited
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Anglo American - United Kingdom
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
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