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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, 13 June 16
BALTIC INDEX FLAT, INDEX FOR CAPE RISE
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities flat this past week. The freight market was almost same l ...
Friday, 10 June 16
INDONESIAN 6322 GAR COAL PRICE REFERENCE RISES TO $51.81 A TON
COALspot.com: The Indonesia Coal Benchmark Price increased in June 2016.
The Director General of Mineral and Coal of Indonesia, the regulator ...
Friday, 10 June 16
WEEKLY U.S. COAL PRODUCTION TOTALED AN ESTIMATED 12 MMST IN THE WEEK ENDED JUNE 4, UP 4% W/W - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 12 million short tons (mmst ...
Wednesday, 08 June 16
BPI ACHIEVES FINANCIAL CLOSE FOR ITS 2000 MW POWER PROJECT IN CENTRAL JAVA
COALspot.com: PT Bhimasena Power Indonesia (BPI) on June 6th, 2016 Achieves financial close for its 2x1,000 MW power project in Batang Regency, Cen ...
Wednesday, 08 June 16
U.S COAL IMPORTS ARE PROJECTED TO BE 12 MMST IN 2016 AND 11 MMST IN 2017 - EIA
Coal Supply
U.S. coal production in May was 50 million short tons (MMst), a 4 MMst (10%) increase from the previous month but 19 MMst (28%) lower ...
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- Eastern Coal Council - USA
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Agrawal Coal Company - India
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Trasteel International SA, Italy
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Malabar Cements Ltd - India
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- McConnell Dowell - Australia
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- GMR Energy Limited - India
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Tata Chemicals Ltd - India
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- PTC India Limited - India
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- Coalindo Energy - Indonesia
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- IHS Mccloskey Coal Group - USA
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- VISA Power Limited - India
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
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