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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, 10 March 14
THE FREIGHT MARKET WAS QUITE FIRM THIS PAST WEEK
COALspot.com: The freight market was quite firm this past week with BDI sharply increased by 22.65 pct week on week and closed at 1543 points, while ...
Saturday, 08 March 14
LETTERS OF INDEMNITY - SKULD
KNOWLEDGE TO ELEVATE
In today's trading market, owners are frequently requested to accept a letter of indemnity (LOI) in exchange for complying ...
Friday, 07 March 14
DRY BULK MARKET TO BENEFIT FROM CHINA'S GDP GROWTH TARGET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
With the dry bulk market freight rates finally making waves, China's aim of 7.5% GDP growth for 2014 mean once again positive news for the shipping ...
Friday, 07 March 14
RBCT, WORLD'S LARGEST COAL EXPORTING TERMINAL SHIPPED 1.78% LESS COAL MONTH ON MONTH
COALspot.com: South Africa's Richards Bay Coal Terminal (RBCT) the single largest export coal terminal in the world, shipped 4.487 million tons of ...
Friday, 07 March 14
INDONESIA SHIPPED 7% LESS COAL IN JANUARY 2014 COMPARED TO ITS DECEMBER EXPORTS
COALspot.com: Indonesia, the world 4th largest coal producer and the Global largest multi grade coal exporter shipped around $1.8* billion ...
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- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Kideco Jaya Agung - Indonesia
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Kohat Cement Company Ltd. - Pakistan
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- Central Electricity Authority - India
- PTC India Limited - India
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Simpson Spence & Young - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Posco Energy - South Korea
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Global Green Power PLC Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- The University of Queensland
- Wood Mackenzie - Singapore
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Economic Council, Georgia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Mercator Lines Limited - India
- Riau Bara Harum - Indonesia
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