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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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Saturday, 07 June 14
U.S. MONTHLY COAL PRODUCTION SLIGHTLY HIGHER IN MAY 2014
COALspot.com – United States the world's second largest coal producer, produced approximately 19.2 million short tons (mmst) of coal in a ...
Friday, 06 June 14
RICHARDS BAY COAL TERMINAL SHIPPED 4.221 MMT OF COAL TO SOUTHERN ASIAN COUNTRIES IN MAY
COALspot.com: South Africa's Richards Bay Coal Terminal (RBCT) the single largest export coal terminal in the world, shipped 5.58 million tons ...
Thursday, 05 June 14
RBCT SOUTH AFRICA SHIPPED 21% LESS COAL IN APRIL COMPARED TO MARCH EXPORTS
COALspot.com: South Africa's Richards Bay Coal Terminal (RBCT) the single largest export coal terminal in the world, shipped 5.45 million tons ...
Thursday, 05 June 14
PANAMAX : THIS WEEK STARTED IN A SLOW PACE - FEARNLEYS
Handy
After last week's silent and unexciting week we see some more activity this week, especially from the South American market. The rates ...
Thursday, 05 June 14
PORT OF NEWCASTLE SHIPPED 2.91 MMT OF COAL IN THIS PAST WEEK
COALspot.com: The figure constitutes a 4.30 percent higher compared to the previous week, following a week on week decreased of 19.13 percent recor ...
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- European Bulk Services B.V. - Netherlands
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- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
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- Africa Commodities Group - South Africa
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- Maheswari Brothers Coal Limited - India
- Kalimantan Lumbung Energi - Indonesia
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- Electricity Authority, New Zealand
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- Bulk Trading Sa - Switzerland
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- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
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- Sojitz Corporation - Japan
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- Georgia Ports Authority, United States
- Interocean Group of Companies - India
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- IEA Clean Coal Centre - UK
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- Antam Resourcindo - Indonesia
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- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
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- Aditya Birla Group - India
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- Indian Energy Exchange, India
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- Chamber of Mines of South Africa
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- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
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- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
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- Krishnapatnam Port Company Ltd. - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Formosa Plastics Group - Taiwan
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Renaissance Capital - South Africa
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- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- The University of Queensland
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
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- Bhoruka Overseas - Indonesia
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- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
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- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
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- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
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- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Parry Sugars Refinery, India
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- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- Thai Mozambique Logistica
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- Kobexindo Tractors - Indoneisa
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- Medco Energi Mining Internasional
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
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- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
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