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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, 07 November 16
INDONESIAN COAL PRICE REFERENCE ROSE 59.57 PER CENT YEAR TO MONTH
COALspot.com: The Indonesia coal benchmark price hits to its highest level since May 2013. The government declared benchmark prices for Indo ...
Monday, 07 November 16
HANDYSIZE: THE ASIAN INDICES RECORDED A GRADUAL DROP EVERY DAY - THE BALTIC BRIEFING
Capesize
A rumour-fuelled market this week but essentially rates a touch firmer and owners cautiously optimistic. The flotilla of vessels heading ...
Monday, 07 November 16
THE SUPRAMAX CHARTER RATES FOR INDONESIA TO INDIA WERE RATING AT AROUND $7500-8000 A DAY
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose slightly and ending in a positive note this past wee ...
Friday, 04 November 16
U.S COAL PRODUCTION UP WEEK OVER WEEK
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 17 million short tons ...
Friday, 04 November 16
INDONESIAN INFRASTRUCTURE DEVELOPMENT TRENDS ARE UNANIMOUSLY AFFIRMED
Press Release: October 20-21, 2016 Indonesia Infrastructure Summit (IIC) opened at the Hyatt Hotel in Jakarta The theme of the meeting was "Pr ...
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- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- Meenaskhi Energy Private Limited - India
- Aditya Birla Group - India
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- Mjunction Services Limited - India
- Eastern Coal Council - USA
- Bhushan Steel Limited - India
- Gujarat Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- White Energy Company Limited
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Ministry of Transport, Egypt
- Planning Commission, India
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
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