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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, 05 August 13
INDO GOVERNMENT'S DECLARED HBA IN AUGUST '13 FALL TO LOWEST LEVEL SINCE JANUARY '10
COALspot. com - HBA fell to US$ 76.70 this month, the lowest since January 2010. Indonesian Coal Price Reference fell 6.11% and hitting a 2013 ...
Sunday, 04 August 13
COAL SWAP MARKET HAS LOST DIRECTION; STRUGGLING TO CATCH UP
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average October 2013 delivery slightly down on day, week and month on Friday, 2 A ...
Sunday, 04 August 13
INDONESIA TO INDIA SUPRAMAX FREIGHT SOFT DUE TO HOLIDAYS IN INDONESIA - VISTAAR
COALspot.com : The freight market was fairly steady this week with the BDI recovering towards north since second half of the week with the support o ...
Friday, 02 August 13
DRY BULK MARKET STABILIZES ON RENEWED MARKET ACTIVITY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept its positive footing this week, although it's still a far cry to deem the market situation as a growing one, especiall ...
Friday, 02 August 13
ASIA ACCOUNTS FOR 27.95 PERCENT OF US COAL EXPORTS IN Q1, 2013
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.80 million short tons (mmst) of ...
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- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Semirara Mining Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Australian Coal Association
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Global Green Power PLC Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Marubeni Corporation - India
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Planning Commission, India
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
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