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