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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, 12 September 16
THE CAPE MARKET HAS GAINS ON WEEK; THE CAPE INDEX SETTLING AT 1566 POINTS ON FRIDAY
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose and ending in a positive note this past week. The BD ...
Friday, 09 September 16
U.S. WEEKLY COAL OUTPUT DECLINED SLIGHTLY TO 16.1 MMST, EIA SAYS
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.1 million short ton ...
Friday, 09 September 16
CAPESIZE: THE SENTIMENT IS SOLID, SAYS FEARNLEYS
Supramax
A quiet start with Labour Day celebrations in the United States leading to very little being reported from the Atlantic basin. Supramaxe ...
Thursday, 08 September 16
U.S. COAL EXPORTS IN JUNE 2016 UP 29% COMPARED TO MAY 2016, SAYS EIA
U.S. coal production in August was 71 million short tons (MMst), which is 6 MMst (9%) higher than in the previous month and 12 MMst (14%) lower tha ...
Wednesday, 07 September 16
WEEKLY MARKET (TANKER) REPORT - INTERMODAL
What goes around comes around! The Shipping industry is infamous for its seasonality and cyclicality and the tanker sector is no exception to these ...
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- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- McConnell Dowell - Australia
- The University of Queensland
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Sarangani Energy Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- VISA Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Therma Luzon, Inc, Philippines
- Jaiprakash Power Ventures ltd
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- Madhucon Powers Ltd - India
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- Edison Trading Spa - Italy
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Holcim Trading Pte Ltd - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Mintek Dendrill Indonesia
- GAC Shipping (India) Pvt Ltd
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- Indika Energy - Indonesia
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
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