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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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Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- India Bulls Power Limited - India
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Economic Council, Georgia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- Australian Coal Association
- ICICI Bank Limited - India
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Banpu Public Company Limited - Thailand
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- The University of Queensland
- Energy Development Corp, Philippines
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- South Luzon Thermal Energy Corporation
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Minerals Council of Australia
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- White Energy Company Limited
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Vedanta Resources Plc - India
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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