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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, 18 October 16
COAL PRICES KEPT CLIMBING
COALspot.com: A rally in thermal coal prices over the past few months, after years of decline, is still continuing and it is expected to rally at l ...
Tuesday, 18 October 16
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Capesize
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THE FREIGHT MARKET WAS SOFTENED IN ALL SEGMENTS THIS PAST WEEK - VISTAAR
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Friday, 14 October 16
SUPRAMAXES: DELIVERY SINGAPORE ARE SETTLING AROUND HIGH 6K'S FOR COAL TRIPS TO CHINA VIA INDO - FEARNLEY
Supramax
Wait and see attitude prevailing all over the market.
There have been several fresh cargoes, which have been efficiently covered by ...
Friday, 14 October 16
U.S. SHIPPED 3.3 MMST COAL IN JULY 2016; DECLINE 40% M/M
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.6 million short ton ...
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- IEA Clean Coal Centre - UK
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Indonesian Coal Mining Association
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Alfred C Toepfer International GmbH - Germany
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- McConnell Dowell - Australia
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Sindya Power Generating Company Private Ltd
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Rio Tinto Coal - Australia
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Romanian Commodities Exchange
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMC Global Power, Philippines
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Anglo American - United Kingdom
- Uttam Galva Steels Limited - India
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- Interocean Group of Companies - India
- Thiess Contractors Indonesia
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- Minerals Council of Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Thai Mozambique Logistica
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Parliament of New Zealand
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