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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, 11 July 21
COAL SHOWS ITS STAYING POWER AS ECONOMIES BOUNCE BACK - THE WALL STREET JOURNAL
Coal use is surging in some of the world’s largest economies as electricity demand rebounds from the pandemic, illustrating the challenges to ...
Sunday, 11 July 21
ROBUST CHINA COAL DEMAND AMID AUSTRALIA IMPORT BAN FUELS PRICE RALLY - REUTERS
Seaborne coal has become a quiet winner among energy commodities, lacking the attention of higher-profile crude oil and liquefied natural gas (LNG) ...
Saturday, 10 July 21
OVERESTIMATED LCOES OF COAL-FIRED POWER PLANTS CREATE A FINANCIAL BUBBLE - IEEFA
Massive stranded asset risk detrimentally affects the financial and power distribution
India’s future coal-fired power project pipeline ...
Friday, 09 July 21
EIA FORECASTS COAL’S GENERATION SHARE IN U.S TO RISE FROM 20% IN 2020 TO 24% THIS YEAR BUT TO FALL TO 22% NEXT YEAR
The July Short-Term Energy Outlook (STEO) of EIA remains subject to heightened levels of uncertainty related to the ongoing economic recovery from ...
Friday, 09 July 21
KOREA SOUTH-EAST POWER CO., LTD. INVITES BIDS FOR 1.86 MILLION TONS OF COAL OF 5600 & 4000 NCV COAL FOR THREE YEARS
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 280,000 – 300,000 MT of Min. ...
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- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Oldendorff Carriers - Singapore
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- Planning Commission, India
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- Australian Coal Association
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Banpu Public Company Limited - Thailand
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Goldman Sachs - Singapore
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- Attock Cement Pakistan Limited
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
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