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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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Sunday, 02 November 14
CAPE INDEX WAS UP 46.65% WEEK ON WEEK
COALspot.com: The BDI and Cape index continued the strong upward trend this week. The BDI was up 19.80 pct and Cape index was up by 46.65 per ...
Friday, 31 October 14
BUKIT ASAM'S NET PROFIT ROSE 27.42% FOR THE PERIOD JANUARY - SEPTEMBER 2014
COALspot.com: Publicly listed coal miner Bukit Asam reported solid profits in the first nine months of 2014 year.
Coal miner Bukit Asam manage ...
Friday, 31 October 14
U.S PRODUCED AROUND 19.3 MMST OF COAL IN A WEEK
COALspot.com – United States the world's one of largest coal producers, produced approximately 19.3 million short tons (mmst) of coal in ...
Thursday, 30 October 14
COAL & GRAINS SUPPORT PANAMAX AND IRON ORE SUPPORTS CAPES
Handy
The Atlantic market has been flat this week. Rates are up about US$ 200 from last week on the TA´s, but the volumes are about the sam ...
Thursday, 30 October 14
DOES A LOU ARBITRATION AGREEMENT FOR THE UNDERLYING CARGO CLAIM COMPLETELY REPLACE THE BILL OF LADING ARBITRATION CLAUSE? - INCE &CO
KNOWLEDGE TO ELEVATE
In the context of cargo claims brought under four bills of lading, the Commercial Court has recently considered whether a ...
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- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- Planning Commission, India
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Karbindo Abesyapradhi - Indoneisa
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- Aboitiz Power Corporation - Philippines
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- The University of Queensland
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Economic Council, Georgia
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- Ministry of Transport, Egypt
- Australian Coal Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Videocon Industries ltd - India
- Simpson Spence & Young - Indonesia
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