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