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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, 17 August 15
INDONESIAN THERMAL COAL REFERENCE PRICE HITS RECORD LOW AGAIN!
COALspot.com - The Director General of Mineral and Coal of Indonesia revised down Indonesian coal benchmark price once again to US$ 59.14 per MT fo ...
Monday, 17 August 15
CFR SOUTH CHINA COAL SWAPS CONTINUE TO HEAD SOUTH
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery declined just US cents 40 (1.05%) per MT month over month.
A commodi ...
Sunday, 16 August 15
INDONESIA TO INDIA FREIGHT RATES ARE EXPECTED TO STEADY NEXT WEEK
COALspot.com: The BDI softened 12.08 per cent to 1055 points this week due to weakening of cape index which was fell 25 per cent week over week to ...
Friday, 14 August 15
FOB INDONESIA COAL SWAP SHOWING NO MOVEMENT THIS PAST WEEK
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and week over week, this past week.
The 4Q swap was declined $ ...
Friday, 14 August 15
U.S. COAL PRODUCTION UP 2.9 PER CENT THIS WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 18.2 million shor ...
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- Bangladesh Power Developement Board
- Indika Energy - Indonesia
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- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Economic Council, Georgia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
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- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- Commonwealth Bank - Australia
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Interocean Group of Companies - India
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- Karaikal Port Pvt Ltd - India
- Xindia Steels Limited - India
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- San Jose City I Power Corp, Philippines
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
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- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- Leighton Contractors Pty Ltd - Australia
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- The University of Queensland
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- Kartika Selabumi Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Binh Thuan Hamico - Vietnam
- Thai Mozambique Logistica
- Minerals Council of Australia
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Planning Commission, India
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
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