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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, 18 May 20
TAKING ADVANTAGE OF VIRUS DISTRACTION - BALTIC EXCHANGE
As the industry grapples to deal with exceptional Covid-19-related challenges, a deeper threat is coming to the fore. At this time of crisis, more ...
Monday, 18 May 20
THERMAL COAL SPOT PRICE TUMBLES 25 PER CENT, PUTTING PRESSURE ON SOME PRODUCERS - ABC RURAL
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Monday, 18 May 20
CHINA'S COAL OUTPUT UP 1.3 PCT IN JANUARY-APRIL: XINHUA
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Sunday, 17 May 20
A 55,000 OPEN ILIGAN FIXING AT $6,500 VIA INDONESIA REDELIVERY INDIA - BALTIC BRIEFING
Capesize
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Friday, 15 May 20
CHINA'S COAL CONSUMPTION TO FALL Y/Y IN SECOND QUARTER, IMPROVEMENT EXPECTED IN SECOND HALF - INDUSTRY BODY: REUTERS
China’s coal consumption is expected to decline in the second quarter from a year earlier, but will see an improvement in the second half of ...
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- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- VISA Power Limited - India
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Star Paper Mills Limited - India
- Central Java Power - Indonesia
- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- TeaM Sual Corporation - Philippines
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- Posco Energy - South Korea
- Deloitte Consulting - India
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
- Energy Development Corp, Philippines
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
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