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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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Friday, 03 February 17
KOMIPO INVITES BIDS FOR 1.13 MILLION TONS OF BITUMINOUS COAL FOR Q2' 17
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 1,130,000 Metric Tons of Bituminous coal f ...
Friday, 03 February 17
U.S. WEEKLY COAL PRODUCTION DECLINED 3.9% W/W; ROSE 17.7% Y/Y
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.1 million short ton ...
Friday, 03 February 17
US - EXECUTIVE ORDER ON IMMIGRATION AFFECTS VESSEL CREWS - GARD
From 27 January 2017, crew members carrying Iraqi, Syrian, Sudanese, Iranian, Somalian, Libyan or Yemeni passports are temporarily barred from ente ...
Wednesday, 01 February 17
MARKET INSIGHT - PANOS TSILINGIRIS
The recent placement of LOIs for 208kdwt Newcastlemax Newbuildings at $38.5m at Private Chinese Yard identifies with the modern history low for dry ...
Tuesday, 31 January 17
A CASE OF NEW YEAR BLUES FOR THE FAR EAST? - GEORGE LAZARIDIS
Unlike the typical lull in the market that we note during the period just prior to the Chinese New Year, 2017 has proved to be fairly m ...
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- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Bukit Asam (Persero) Tbk - Indonesia
- Indonesian Coal Mining Association
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- PowerSource Philippines DevCo
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- Merrill Lynch Commodities Europe
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- Parliament of New Zealand
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Indogreen Group - Indonesia
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Mercuria Energy - Indonesia
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Aditya Birla Group - India
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Australian Commodity Traders Exchange
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