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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, 07 June 20
A SCRUBBER FITTED 61,000 ULTRAMAX WAS FIXED DELIVERY PHILIPPINES TRIP VIA SOUTH AFRICA REDELIVERY VIETNAM AT $9,500 - BALTIC BRIEFING
Capesize
The small flicker of hope at the beginning of this week has kindled a small fire under the Capesize market. At a paltry $3369 from the ...
Saturday, 06 June 20
KOREA SOUTH-EAST POWER CO INVITED COAL BIDS FOR MIN 5600 NCV COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 270,000 Tons (MT) min. 5600 NCV co ...
Friday, 05 June 20
COAL INDIA ESTIMATES PRODUCTION GROWTH BY OVERBURDEN REMOVAL - FINANCIAL EXPRESS
PSU miner Coal India (CIL) has now limited mining only to Overburden Removal (OBR) with falling demand of coal. The mining behemoth is now keeping ...
Friday, 05 June 20
U.S. SANCTIONS COMPLIANCE GUIDANCE RELEASED FOR THE GLOBAL MARITIME, ENERGY AND METALS SECTORS - AKIN GUMP
Key Points
On May 14, 2020, OFAC, the Department of State and the U.S. Coast Guard jointly released guidance for persons involved in the ma ...
Friday, 05 June 20
IN THE FIRST 5 MONTHS OF 2020 AUSTRALIA SHIPPED 6.8 MLN TONNES TO VIETNAM - BANCHERO COSTA
In the first 5 months of 2020, global seaborne coal trade declined by as much as -8% year-on-year, according to vessel tracking data from Ref ...
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- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercator Lines Limited - India
- Marubeni Corporation - India
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Essar Steel Hazira Ltd - India
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- Lanco Infratech Ltd - India
- Indian Oil Corporation Limited
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Aditya Birla Group - India
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- The University of Queensland
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Chettinad Cement Corporation Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Larsen & Toubro Limited - India
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- Australian Commodity Traders Exchange
- Australian Coal Association
- Planning Commission, India
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Bhoruka Overseas - Indonesia
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