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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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Friday, 19 December 14
HOW WILL LOWER BUNKER PRICES AFFECT THE SUBSTANTIAL OVERCAPACITY IN DRY BULK MARKET? - BIMCO
As bunker fuel costs have come down from USD 600 per tonnes to USD 330 per tonnes in the past 6 months, much talk about increased ship speed have s ...
Friday, 19 December 14
U.S WEEKLY COAL PRODUCTION REACHED APPROXIMATELY 19.8 MMST; UP 1.0% WOW
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.8 million short tons (mmst) of coal ...
Friday, 19 December 14
HANDY: SOFTER TONE; PANAMAX: QUIET WEEK; CAPESIZE; PAINFUL WEEK
Handy
A softer tone for rates and volumes for the Supras, perhaps less apparent in the Pacific the last week before the season holidays and good ...
Thursday, 18 December 14
INDONESIA TO REVISE UP COAL OUTPUT TARGET TO 460 MILLION TONS IN 2015
COALspot.com: Indonesian government has revised up its next year coal output forecast to 460 million tons from its previous forecast of 421 million ...
Wednesday, 17 December 14
CAPES RATES SLIPPED BELOW $5,600/DAY, FELL 84% YOY
COALspot.com: In the very rare occurrence when the BCI stands below the BDI, words to describe market sentiment are probably poor, said Intermodal ...
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- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
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- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
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- Sindya Power Generating Company Private Ltd
- International Coal Ventures Pvt Ltd - India
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
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- GVK Power & Infra Limited - India
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- Rio Tinto Coal - Australia
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- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
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- Commonwealth Bank - Australia
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
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- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
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- Economic Council, Georgia
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- Bhoruka Overseas - Indonesia
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- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- Malabar Cements Ltd - India
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- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
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- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
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- Salva Resources Pvt Ltd - India
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Sidhee Cement - India
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Minerals Council of Australia
- Australian Coal Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Energy Development Corp, Philippines
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- Manunggal Multi Energi - Indonesia
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- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
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- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Jindal Steel & Power Ltd - India
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- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- San Jose City I Power Corp, Philippines
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- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
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- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
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- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
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- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
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- Renaissance Capital - South Africa
- Petron Corporation, Philippines
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- Goldman Sachs - Singapore
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- Indian Energy Exchange, India
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