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