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