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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, 29 August 16
THE 5000 GAR THERMAL COAL INDEX HAS STRENGTHENED BY 9.90% SINCE JANUARY
COALspot.com: A rally in thermal coal prices over the past few months, after years of decline, is still continuing upward and it is expected to ral ...
Monday, 29 August 16
THE FREIGHT MARKET WAS STEADY AND FIRM THIS PAST WEEK; BCI ROSE 18.74%
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose and ending in a positive note this past week except ...
Friday, 26 August 16
WEEKLY US COAL OUTPUT UP 0.7% W/W TO 16 MMST: EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16 million short tons ...
Thursday, 25 August 16
SUPRAMAXES ARE BEING FIXED IN REGION OF $9000
Supramax
Due to Chinese coal imports which continues to source much of the tonnage in SE Asia combined with a good flow of mineral exports ex Aus ...
Wednesday, 24 August 16
MARKET INSIGHT
Brazil and the world bid farewell on Sunday to the first Olympic Games in South America in the midst of a finale meant to be both one last bash and ...
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- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- TNB Fuel Sdn Bhd - Malaysia
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- Pendopo Energi Batubara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- Minerals Council of Australia
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Sree Jayajothi Cements Limited - India
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Banpu Public Company Limited - Thailand
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Australian Coal Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- The University of Queensland
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Parry Sugars Refinery, India
- Jindal Steel & Power Ltd - India
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
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