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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, 19 March 20
A CRUDE TSUNAMI: UP TO 3 MILLION BPD OF EXTRA OIL CAN HIT THE MARKET FROM APRIL, MORE COMING IN MAY - RYSTAD ENERGY
The extra oil coming into the global market from April will be as much as 3 million barrels per day (bpd), Rystad Energy estimates. Two million bpd ...
Thursday, 19 March 20
BIMCO REVISES 2020 FORECAST FOR MAIN SHIPPING MARKETS
The coronavirus pandemic is impacting global shipping demand for 2020 negatively. The speed of the virus spread makes it difficult to assess the fu ...
Thursday, 19 March 20
U.S. COAL EXPORTS DECLINED IN 2019 - EIA
In 2019, U.S. coal exports declined to 93 million short tons (MMst), a 20% decrease from the previous year, according to the U.S. Energy Informatio ...
Thursday, 19 March 20
SOUTH KOREA'S KOSPO INVITED BIDS FOR MIN 3,700 OR MIN 4,200 NCV LOW CALORIFIC VALUE COAL
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO), has issued an international tender for total 160,000 MT (±10%) (80,000 x 2 Panamax) of ...
Wednesday, 18 March 20
DRY BULK: INDONESIAN COAL CARGOES PROVIDING A BIG BOOST IN THE EAST WHERE SENTIMENT FOR HANDIES ALSO STARTED IMPROVING - INTERMODAL
The BDI ended last week with small gains on the back of an encouraging number of cargoes out of key trading regions that helped sustain the reserve ...
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- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Mintek Dendrill Indonesia
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Orica Mining Services - Indonesia
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Australian Coal Association
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Planning Commission, India
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- Aditya Birla Group - India
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- Iligan Light & Power Inc, Philippines
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Attock Cement Pakistan Limited
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
- Meenaskhi Energy Private Limited - India
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- Kapuas Tunggal Persada - Indonesia
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
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