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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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Sunday, 18 August 13
SUB-BIT FOB INDONESIA COAL SWAP : ON POSITIVE DIRECTION ON DAY, WEEK AND MONTH
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average Q4 2013 delivery US$ 1.83 up month on month. The swap was moved positive ...
Sunday, 18 August 13
INDO - INDIA FREIGHT EXPECTED TO BE FIRM NEXT WEEK - VISTAAR
COALspot.com - The freight market was up this week with the BDI gaining more than 10 pct due to strong Cape Sector.
The BDI was closed at 1,102 p ...
Friday, 16 August 13
US COAL PRODUCTION SLIGHTLY UP ON WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.10 million short tons (mmst) of ...
Thursday, 15 August 13
CAPESIZE : TRENDS SOMETIMES SHIFT WITH NO PRIOR WARNING - FEARNRESEARCH
Handy
The influence of the summer holidays across Europe was felt in the Atlantic basin this week. Very little activity and a growing list of avail ...
Wednesday, 14 August 13
ANOTHER WEEK IN THE RED FOR DRY BULK CARRIERS - INTERMODAL
Chartering (Wet: Stable- / Dry: Stable- )
Another week in the red for Dry Bulk carriers with the market losing further steam as fewer an ...
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- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
- Central Electricity Authority - India
- London Commodity Brokers - England
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- The University of Queensland
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- Central Java Power - Indonesia
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Rio Tinto Coal - Australia
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Malabar Cements Ltd - India
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Chamber of Mines of South Africa
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Kapuas Tunggal Persada - Indonesia
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Ministry of Mines - Canada
- White Energy Company Limited
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
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