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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, 23 March 15
CFR SOUTH CHINA COAL SWAP: Q3 DELIVERY HAS FALLEN 7.93% MONTH-ON-MONTH
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 4.09 (-7.06%) per MT month over month and US$ 2.00 (-3 ...
Monday, 23 March 15
SEABORNE WORLD COAL TRADE: GROWTH +5% - GERMAN COAL IMPORTER ASSOCIATION
Hard Coal Market 2014: Despite The Energy Turnaround, Hard Coal Imports To Germany Rise By More Than 6%, Although Hard Coal-Fired Power Generation ...
Sunday, 22 March 15
DRY BULK RATES CONTINUED TO RISE THIS WEEK
COALspot.com: The freight market was steady this week as all the segments increased after many weeks of weak trend.
The Baltic Dry Index (BDI) ...
Friday, 20 March 15
HARD COAL MARKET 2014: DESPITE THE ENERGY TURNAROUND, HARD COAL IMPORTS TO GERMANY RISE BY MORE THAN 6% (PART 1)
Hard Coal Market 2014: Despite The Energy Turnaround, Hard Coal Imports To Germany Rise By More Than 6%, Although Hard Coal-Fired Power Generation ...
Friday, 20 March 15
U.S. WEEKLY COAL PRODUCTION SHOWS 5.9% INCREASE WEEK OVER WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.5 million short tons (mmst) of coal ...
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- Sindya Power Generating Company Private Ltd
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Metalloyd Limited - United Kingdom
- Larsen & Toubro Limited - India
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Straits Asia Resources Limited - Singapore
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Minerals Council of Australia
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- Borneo Indobara - Indonesia
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- Ministry of Mines - Canada
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Carbofer General Trading SA - India
- Edison Trading Spa - Italy
- CIMB Investment Bank - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
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