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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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Friday, 06 March 20
COLOMBIAN COAL OUTPUT FELL 2% IN 2019 - REUTERS
Coal production in Colombia, the fifth-largest coal exporter in the world, fell 2% to 82.2 million tonnes in 2019 after output at one of the princi ...
Friday, 06 March 20
SOLID BACKING FOR LNG AS A MARINE FUEL - BALTIC EXCHANGE
When it comes to choosing the best fuel on the near horizon to help the international shipping industry shrink its carbon intensity by 2050, DNV GL ...
Friday, 06 March 20
INDONESIA COAL PRICE REFERENCE UP AGAIN THIS MONTH
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Thursday, 05 March 20
PANAMAX: SHIP-OWNERS HAVE MOSTLY BEEN GETTING HIGHER RATES THAN THE LAST DONE - FEARNLEYS
Cape
There is still limited amount of positive news around, with the effects of Corona virus hurting world economy. However, overall average in ...
Thursday, 05 March 20
COAL IMPORTS DOWN IN MAJOR ASIAN MARKETS, AND CORONAVIRUS NOT THE DRIVING FORCE - CLYDE RUSSELL
Asia’s seaborne coal markets stumbled in February and it appears the coronavirus outbreak in China may dodge most of the blame, with the weak ...
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- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- London Commodity Brokers - England
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- Bhatia International Limited - India
- Ministry of Mines - Canada
- South Luzon Thermal Energy Corporation
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Parliament of New Zealand
- Deloitte Consulting - India
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Petron Corporation, Philippines
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Rio Tinto Coal - Australia
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- Independent Power Producers Association of India
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Star Paper Mills Limited - India
- Aditya Birla Group - India
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- Larsen & Toubro Limited - India
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
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