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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
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, 16 April 20
CHINA'S BENCHMARK POWER COAL PRICE FALLS 5 YUAN PER TONNE - XINHUA
China’s benchmark power coal price fell by 5 yuan (about 70 U.S. cents) per tonne during the past week.
The Bohai-Rim Steam-Co ...
Thursday, 16 April 20
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As everyone anticipated the results of the OPEC + G20 meeting last week, it was very interesting to watch the reaction of tanker rates that were in ...
Monday, 13 April 20
SUPRAMAX: A 56,000DWT SHIP WAS FIXED DELIVERY PARADIP, REDELIVERY CHINA, AT $4,700 - BALTIC BRIEFING
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Saturday, 11 April 20
FAQ: COVID-19 AND CLUB COVER - UK P&I
KNOWLEDGE TO ELEVATE
The Coronavirus (COVID-19) pandemic has generated a significant number of enquiries and questions from Members in recent ...
Saturday, 11 April 20
KOEN POWER PLANTS INVITED BIDS FOR 1.5 -1.62 MMT OF STEAM COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 1,500,000-1,620,000 Metric Tons (M ...
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- Essar Steel Hazira Ltd - India
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- The Treasury - Australian Government
- Straits Asia Resources Limited - Singapore
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Rio Tinto Coal - Australia
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Carbofer General Trading SA - India
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Wilmar Investment Holdings
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- Minerals Council of Australia
- Deloitte Consulting - India
- VISA Power Limited - India
- Sojitz Corporation - Japan
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bangladesh Power Developement Board
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Ceylon Electricity Board - Sri Lanka
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Orica Australia Pty. Ltd.
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- TeaM Sual Corporation - Philippines
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- Australian Coal Association
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Bukit Baiduri Energy - Indonesia
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Heidelberg Cement - Germany
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
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