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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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Tuesday, 29 November 16
US WEEKLY COAL OUTPUT TOTALS 17.2 MMST, UP 2.8% : EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 17.2 million short ton ...
Monday, 28 November 16
BALTIC DRY INDEX FALLS TO 1181 POINT, DOWN 76 POINTS W/W
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities down slightly and ending in a negative note this past wee ...
Thursday, 24 November 16
SUPRAMAX: SOUTH AFRICA STILL STRONG WITH OWNERS ACHIEVING AROUND USD 14-15K FOR TRIPS EAST - FEARNLEYS
Supramax
A positive kick-off in both the Atlantic and the Pacific. Very healthy rates within USG, some supras receiving well over 20k for trips t ...
Wednesday, 23 November 16
MARKET INSIGHT - CHRISTOPHER THOMAS WHITTY
The Organization of the Petroleum Exporting Countries (OPEC) is due to finalize a reduction in total production at its next scheduled meeting in Vi ...
Tuesday, 22 November 16
ITALY'S STEAM COAL IMPORTS EXPECTED TO DECLINE 7% Y/Y TO 15 MILLION TONS IN 2017 - ITALIAN COAL ASSOCIATION
Italy’s steam coal imports expected to decline to 15 million tons in 2017, or 7% less imports compared to 2016. The coking coal imports are e ...
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- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Indonesian Coal Mining Association
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Gujarat Sidhee Cement - India
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Marubeni Corporation - India
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CIMB Investment Bank - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- VISA Power Limited - India
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- Australian Coal Association
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- PTC India Limited - India
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
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