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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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Thursday, 15 May 14
USA COAL CONFERENCE
Press Release: IHS Inc. (NYSE: IHS), the leading global source of information and analysis, will host the Coal USA Conference, June 18-20, 2014, ...
Wednesday, 14 May 14
COAL PRICES IN CHINA HAVE DROPPED TO THEIR LOWEST LEVELS SINCE END-2008
COALspot.com: Coal prices in China have dropped to their lowest levels since end-2008, Fitch says in its latest rating report on one of the coal ...
Wednesday, 14 May 14
ALMOST THROUGH THE HALF OF THE YEAR, THE DRY BULK INDEX SHOW SIGNS OF WEAKNESS; CREATING TO BOTH EXISTING SHIP OWNERS AND POTENTIAL INVESTORS A LOT OF INSECURITY - PANOS MAKRINOS
Almost through the half of the year, the overall shipping market and more specifically the Dry Bulk Index show signs of weakness, creating to bo ...
Tuesday, 13 May 14
NPC COAL EXPORT VOLUMES PLUNGE TO 2.48 MMT WEEK ON WEEK
COALspot.com: In the week ended 07:00 hours 12 May 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Quee ...
Tuesday, 13 May 14
YET ANOTHER POSIDONIA EXHIBITION IS ON ITS WAY - INTERMODAL
With less than a month to go before another Posidonia exhibition starts and all the parties and celebrations get under way we thought that it wo ...
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- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
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- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Romanian Commodities Exchange
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- New Zealand Coal & Carbon
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- Vedanta Resources Plc - India
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Bhoruka Overseas - Indonesia
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Bhushan Steel Limited - India
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- Central Electricity Authority - India
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Bharathi Cement Corporation - India
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- Dalmia Cement Bharat India
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Ministry of Mines - Canada
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- ICICI Bank Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Australian Coal Association
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
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