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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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- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- India Bulls Power Limited - India
- Mjunction Services Limited - India
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Posco Energy - South Korea
- Marubeni Corporation - India
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Lanco Infratech Ltd - India
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Interocean Group of Companies - India
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Authority, New Zealand
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Indogreen Group - Indonesia
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Kumho Petrochemical, South Korea
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Gujarat Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
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