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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, 12 May 14
TAIPOWER TO IMPORT AROUND 1 MMT OF SUB-BITUMINOUS COAL DURING AUGUST 2014 THROUGH NOVEMBER 2014
COALspot.com - Taiwan Power Company intends to procure 1.050 million tons of sub-bituminous coal for Taipower thermal power plant through open t ...
Monday, 12 May 14
DRY BULK MARKET IS STILL STRUGGLING TO FIND FIRM FOOTING
COALspot.com: The freight market continued to be weak and the BDI closed slightly lower at 997 points or fell 1.96 pct week on week. The cape in ...
Friday, 09 May 14
RBCT SHIPPED 5.4 MMT OF COAL IN APRIL
COALspot.com: South Africa's Richards Bay Coal Terminal (RBCT) the single largest coal export terminal in the world, shipped 5.45 million to ...
Friday, 09 May 14
DRY BULK MARKET: BANKRUPTCY TONNAGE UNLEASHED
Drewry’s latest Dry Bulk Forecaster saw freight rates on most routes declined in 2014’s first quarter as the previous quarter’ ...
Friday, 09 May 14
UNITED STATES COAL PRODUCTION SLIGHTLY SLIDES TO 82.4 MMST IN APRIL
COALspot.com – United States the world's second largest coal producer, produced approximately 18.8 million short tons (mmst) of coal i ...
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- Marubeni Corporation - India
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Madhucon Powers Ltd - India
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- VISA Power Limited - India
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
- GVK Power & Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Australian Commodity Traders Exchange
- Planning Commission, India
- Price Waterhouse Coopers - Russia
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- Australian Coal Association
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Orica Mining Services - Indonesia
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wood Mackenzie - Singapore
- Indonesian Coal Mining Association
- Georgia Ports Authority, United States
- PTC India Limited - India
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Timah Investasi Mineral - Indoneisa
- Mercator Lines Limited - India
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Holcim Trading Pte Ltd - Singapore
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Coastal Gujarat Power Limited - India
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Malabar Cements Ltd - India
- Tata Chemicals Ltd - India
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
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