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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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Thursday, 08 May 14
'TRIAL BY MEDIA, TRIAL BY LAW' - A REPORT FROM TRACK 1 OF BIMCO'S ANNUAL CONFERENCE DUBAI 2014
KNOWLEDGE TO ELEVATE
Aiming to bring a very different type of event into their annual conference, BIMCO presented ‘Double Jeopardy &n ...
Thursday, 08 May 14
INDONESIAN COAL PRICE REFERENCE IN MAY CRASHES THROUGH $74
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has revised down again the coal bench mark price by US$ 1.21 / MT to ...
Wednesday, 07 May 14
THE DRY BULK MARKET HAS NOTED ANOTHER WEEKLY POSITIVE GAIN
Chartering (Wet: Softer- / Dry: Stable+)
The Dry Bulk market has noted another weekly positive gain, driven by the Capesize segment, but we ne ...
Wednesday, 07 May 14
SGX ENHANCES ITS COMMODITIES PRODUCT OFFERING
COALspot.com: SGX is building up its bulk commodity product offerings with 9 more derivative contracts over the next 2 months, subject to regula ...
Tuesday, 06 May 14
NEWCASTLE COAL EXPORT SLIPS 7.92% WEEK ON WEEK
COALspot.com: In the week ended 07:00 hours 5 May 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- The University of Queensland
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Asmin Koalindo Tuhup - Indonesia
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- Thiess Contractors Indonesia
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- Parliament of New Zealand
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
- Australian Coal Association
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Bhatia International Limited - India
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
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