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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, 26 October 15
CFR SOUTH CHINA COAL SWAPS CLOSE DOWN 4.3% AS DEMAND CONCERNS WEIGH
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down just US$ 1.48 (3.02 %) per ton month over month.
A commodity sw ...
Sunday, 25 October 15
ANOTHER DISAPPOINTING WEEK FOR PANAMAX; INDEX FELL 5.4 PERCENT W-W
COALspot.com: The BDI was slightly up by 2.65 pct closing at 774 points mainly because of Cape index which was up by 10.85 pct closing at 1461 poin ...
Sunday, 25 October 15
DRY BULK SHIP OWNERS ARE LOOKING TO CHINA'S POLICIES FOR CUES ON FUTURE MARKET DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
China’s hard or softer landing is a thing which has troubled dry bulk shipping for a couple of years now, as owners have been hit by the coun ...
Friday, 23 October 15
WILL INDIAN DOMESTIC COAL PRICES BE ABLE TO COMPETE IMPORTED COAL PRICES IF THE CURRENT TREND CONTINUES?
COALspot.com: The Most of the Indian end-users are waiting for last minute purchase to enjoy every drop in price. Coal procurement managers are als ...
Friday, 23 October 15
COAL PRODUCTION IN THE U.S. FOR THE WEEK ENDING OCTOBER 17 DECLINED FOR THE SECOND STRAIGHT WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.6 million shor ...
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- Sinarmas Energy and Mining - Indonesia
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- Riau Bara Harum - Indonesia
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Bharathi Cement Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- Jaiprakash Power Ventures ltd
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Kaltim Prima Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- The University of Queensland
- Attock Cement Pakistan Limited
- Antam Resourcindo - Indonesia
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Iligan Light & Power Inc, Philippines
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- PTC India Limited - India
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- McConnell Dowell - Australia
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Billiton Holdings Pty Ltd - Australia
- MS Steel International - UAE
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
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