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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, 07 April 14
WEEKLY SUB-BIT FOB INDONESIA COAL SWAP CLAIMS EDGE FALL; TREND NEGATIVE
COALspot.com: Indonesian coal swaps for average Q4’ 2014 lost on month, day and on week according to AsiaClear OTC coal swap's reports ...
Monday, 07 April 14
API 8 CFR SOUTH CHINA COAL SWAPS GAINED 2.09% M-O-M
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries gained 2.09 percent month on month and closed at US$ 75.68 per ...
Sunday, 06 April 14
THE FREIGHT MARKET KEEPS SLIDING
COALspot.com: The freight market continued to drop this week. The BDI (Baltic Dry Index) is a widely followed metric that reflects the overall r ...
Friday, 04 April 14
UNITED STATES COAL OUTPUT UP 5.4% IN PAST WEEK
COALspot.com – United States the world's second largest coal producer, produced approximately 19.9 million short tons (mmst) of coal i ...
Thursday, 03 April 14
PANAMAX SECTOR IS WATCHING A SEVERE DROP IN RATES - FEARNLEYS
Handy
A further weaker sentiment for the Supras as well in both hemispheres this week with oversupply of tonnage being the major headline. Tra ...
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- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
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- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
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- Neyveli Lignite Corporation Ltd, - India
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- Indian Oil Corporation Limited
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- Georgia Ports Authority, United States
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- Bukit Baiduri Energy - Indonesia
- Parliament of New Zealand
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- The Treasury - Australian Government
- Videocon Industries ltd - India
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
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- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- Alfred C Toepfer International GmbH - Germany
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- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
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- New Zealand Coal & Carbon
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- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Interocean Group of Companies - India
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- Energy Development Corp, Philippines
- Sarangani Energy Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
- The University of Queensland
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- White Energy Company Limited
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- Deloitte Consulting - India
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- Edison Trading Spa - Italy
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
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