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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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Wednesday, 12 October 16
MARKET INSIGHT - LINOS KOGEVINAS
Another Monday has gone by, bringing with it further turbulence for oil. A series of meetings between high-production nations Russia & Saudi Ar ...
Wednesday, 12 October 16
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Wednesday, 12 October 16
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Monday, 10 October 16
INDONESIAN COAL PRICE REFERENCE HITS HIGHEST LEVELS SINCE SEPTEMBER 2014
COALspot.com: The Indonesia coal benchmark price hits to its highest level since September 2014. The government declared benchmark prices for Indon ...
Monday, 10 October 16
THE FREIGHT MARKET FIRMS UP ON STRONG CAPE PERFORMANCE
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose again and ending in a positive note this past week. ...
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- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Baramulti Group, Indonesia
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- Tamil Nadu electricity Board
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Semirara Mining and Power Corporation, Philippines
- Sical Logistics Limited - India
- PTC India Limited - India
- Indogreen Group - Indonesia
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Coal and Oil Company - UAE
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- Orica Australia Pty. Ltd.
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- Parry Sugars Refinery, India
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Australian Coal Association
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- Trasteel International SA, Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- Wood Mackenzie - Singapore
- Krishnapatnam Port Company Ltd. - India
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- The University of Queensland
- Ministry of Finance - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
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