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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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Sunday, 10 November 13
PANAMAX COAL FREIGHT RATES REMAIN UNDER PRESSURE; SUPRAMAX BIGGEST GAINER - REDDY
COALspot.com: The freight market was up this week with all indices increased except for Panamax index.
The BDI was up by 56 points closing at 158 ...
Friday, 08 November 13
DRY BULK MARKET BOUNCES BACK ON RENEWED DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market staged a mild comeback this week, as the industry's benchmark, the Baltic Dry Index (BDI) inched forward step by step and bit b ...
Friday, 08 November 13
US'S OCTOBER COAL PRODUCTION INCREASED BY 1.78% M-M - EIA
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.3 million short tons (mmst) of coal in ...
Thursday, 07 November 13
FORMOSA PLASTICS SEEKS 80K MT OF 5850 GAR COAL
COALspot.com: Taiwan's Formosa Plastics Group is inviting bids for 80,000 mt of bituminous coal for delivery in Nov - Dec'13 for its Chi ...
Thursday, 07 November 13
INDONESIAN COAL EXPORT VOLUME INCREASED; REVENUE DECREASED
COALspot.com: Indonesia, the 15th largest economy, 4th largest coal producer in the world and world's largest multi grade coal exporter shipp ...
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- India Bulls Power Limited - India
- VISA Power Limited - India
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Bukit Baiduri Energy - Indonesia
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- PNOC Exploration Corporation - Philippines
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Australian Coal Association
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Iligan Light & Power Inc, Philippines
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Metalloyd Limited - United Kingdom
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Meralco Power Generation, Philippines
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Bulk Trading Sa - Switzerland
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Bahari Cakrawala Sebuku - Indonesia
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
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