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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, 26 December 16
DO THE DERIVATIVES MARKETS MAKE COAL PRICES MORE VOLATILE? 59.21% SAY YES, POLL
COALspot.com: The substantial increase or decrease in coal prices within a short period of time has been supported by a number of fundamental drive ...
Friday, 23 December 16
U.S. YEAR-TO-DATE COAL PRODUCTION TOTALED 711.1 MMST; DOWN 18.5% Y/Y - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.7 million short ton ...
Thursday, 22 December 16
INDONESIA LACK OF EXPORT TO INDIA THIS WEEK - FERNLEYS
Supramax
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According to Astrup Fernley, backhaul ...
Wednesday, 21 December 16
THE SUPREME COURT DECISION IN OW BUNKERS - WHEN A SALE OF GOODS IS NOT A SALE OF GOODS - LEON ALEXANDER, CLYDE&CO
KNOWLEDGE TO ELEVATE
In May 2016 the Supreme Court of England & Wales gave judgment in an OW Bunkers test case entitled "Res Cogitans ...
Wednesday, 21 December 16
CLEANING THE OCEANS FROM PLASTIC - SOPHIE COTZIAS
2016 is coming to a close and it finds us in preparation for the 2017 enforcement of the Ballast Water Treatment Systems. We naturally are in thoug ...
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- San Jose City I Power Corp, Philippines
- Toyota Tsusho Corporation, Japan
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- Siam City Cement - Thailand
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- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- White Energy Company Limited
- Tata Chemicals Ltd - India
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- Indogreen Group - Indonesia
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- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
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- South Luzon Thermal Energy Corporation
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
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- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
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- Aboitiz Power Corporation - Philippines
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- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
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- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- The University of Queensland
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Manunggal Multi Energi - Indonesia
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- Essar Steel Hazira Ltd - India
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
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- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- Electricity Generating Authority of Thailand
- Rio Tinto Coal - Australia
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Economic Council, Georgia
- Independent Power Producers Association of India
- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Planning Commission, India
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
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