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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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- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Romanian Commodities Exchange
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Thai Mozambique Logistica
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- India Bulls Power Limited - India
- Ministry of Finance - Indonesia
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- VISA Power Limited - India
- Petron Corporation, Philippines
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Agrawal Coal Company - India
- Central Electricity Authority - India
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- The University of Queensland
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- Heidelberg Cement - Germany
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Jindal Steel & Power Ltd - India
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
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