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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, 07 May 20
CRUDE OIL TANKER EARNINGS DROP 68% IN NINE DAYS - BIMCO
Crude oil tanker earnings have come down sharply in recent weeks with Very Large Crude Carrier (VLCC) earnings from the Middle East Gulf to China d ...
Thursday, 07 May 20
UKRAINE PRODUCES 2.5 MLN TONNES OF COAL IN APRIL - UKRINFORM
Ukraine produced 2.5 million tonnes of coal in April 2020, which is 39% less than planned, according to the Coal Miners Union of Ukraine.
...
Thursday, 07 May 20
INDIA: GOVT TO DO AWAY WITH MANDATORY WASHING OF COAL FOR THERMAL POWER UNITS - BUSINESS STANDARD
The Centre is planning to do away with the mandatory requirement of washing of coal before it is transported to thermal power stations. The Ministr ...
Thursday, 07 May 20
CIL'S SUPPLY TO POWER SECTOR FALLS IN MARCH AMID SLUMP IN COAL DEMAND - PTI
The supply of coal to the power sector by state-owned CIL registered a decline of eight per cent to 42.30 million tonne in March in the wake of slu ...
Thursday, 07 May 20
COAL PRICE REFERENCE FALL SHARPLY IN MAY 2020 DUE TO CORONAVIRUS OUTBREAK
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
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- Electricity Authority, New Zealand
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- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
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- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Trasteel International SA, Italy
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
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- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
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- Sinarmas Energy and Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
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- PowerSource Philippines DevCo
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
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- Orica Mining Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
- Indonesian Coal Mining Association
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- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
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- Mercuria Energy - Indonesia
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- Kumho Petrochemical, South Korea
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Billiton Holdings Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Kepco SPC Power Corporation, Philippines
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- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kideco Jaya Agung - Indonesia
- Aditya Birla Group - India
- The University of Queensland
- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Banpu Public Company Limited - Thailand
- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
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- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Minerals Council of Australia
- Kalimantan Lumbung Energi - Indonesia
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Xindia Steels Limited - India
- Parliament of New Zealand
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- CNBM International Corporation - China
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Singapore Mercantile Exchange
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Coalindo Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
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