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