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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, 22 September 14
COAL SECTOR CHAOS - GENESIS TO REVELATION - DIPESH DIPU
COALspot.com: “Let there be light”, intends the government of India but the fuel side of the story paints a blackout. The recent Suprem ...
Monday, 22 September 14
CFR SOUTH CHINA COAL SWAPS LOST ON DAY, WEEK AND MONTH
COALspot.com: API 8 CFR South China Coal swap for delivery in October 2014 decreased US$ 3.10 (-4.50%) month over month and $ 0.95 PT MT week over ...
Monday, 22 September 14
INDONESIAN COAL SWAPS LOST WEEK ON WEEK AND MONTH OVER MONTH
COALspot.com: Indonesian coal swaps for average October 2014 increased US$ 0.35 (+0.69%) day on day and lost US$ 0.30 (-0.58%) per mt week on week. ...
Sunday, 21 September 14
CAPE INDEX LOST 17% W-O-W ; BALTIC DRY PLUNGES 106 POINTS
COALspot.com: This week the freight market softened a bit compared to last week.
BDI fell 8.97% week on week and closed BDI at 1075 points on ...
Friday, 19 September 14
U.S. WEEKLY COAL PRODUCTION RELATIVELY FLAT AT +0.1% - EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 19.20 million short tons (mmst) of coal in ...
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- Sical Logistics Limited - India
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- Makarim & Taira - Indonesia
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- Renaissance Capital - South Africa
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- Planning Commission, India
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- Banpu Public Company Limited - Thailand
- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- Commonwealth Bank - Australia
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- The University of Queensland
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Metalloyd Limited - United Kingdom
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Indian Oil Corporation Limited
- Timah Investasi Mineral - Indoneisa
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- Gujarat Sidhee Cement - India
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