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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, 28 March 16
THE SUPRAMAX INDEX WAS UP TWENTY-FOUR POINTS TO 473 POINTS
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
Friday, 25 March 16
DRY BULK SHIPPING FLEET WILL GROW BY 1.3% DURING 2016 - BIMCO | HELLENIC SHIPPING NEWS
The dry bulk market will keep on suffering, at least until the start of 2017 and possibly well after that, should the current balance of supply and ...
Friday, 25 March 16
U.S COAL PRODUCTION DECLINED 9.1% W/W - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 11.3 million shor ...
Thursday, 24 March 16
PERSISTENT OVERCAPACITY TO PROLONG CHINA'S COAL SECTOR DOWNTURN - FITCH
China's coal sector is likely to remain under pressure in the short to medium term as structural weaknesses in demand and overcapacity persist, ...
Thursday, 24 March 16
SEABORNE TRADE: CHECKING UP ON THE TRENDS - CLARKSON RESEARCH
Following a decline in 2009, seaborne trade grew on average by 4.9% p.a. in 2010-13, reflecting booming import demand in a number of key importing ...
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- Ambuja Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- South Luzon Thermal Energy Corporation
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- PTC India Limited - India
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Eastern Coal Council - USA
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- White Energy Company Limited
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- SMG Consultants - Indonesia
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