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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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Wednesday, 19 February 20
MINERS WELCOME INDONESIA'S NEW JOBS BILL THAT COULD SPUR COAL GROWTH - REUTERS
Miners have welcomed proposed changes to Indonesian mining rules under a new law aimed at boosting investment, though critics are concerned that th ...
Wednesday, 19 February 20
AS OCEAN TEMPERATURES RISE, SHIPOWNERS LOOK FOR WAYS TO COPE - WARTSILA
The world is heating up, and its oceans are no exception. According to the International Panel on Climate Change (IPCC), the oceans absorb the majo ...
Wednesday, 19 February 20
MARKET INSIGHT - INTERMODAL
The coronavirus outbreak is estimated to negatively affect global economy by at least EUR400bn this year, representing around the 0.4% of global GD ...
Tuesday, 18 February 20
WEEKLY MARKET ANALYSIS - ALLIED
Under such poorly performing market circumstances, many usually take the historical approach, in order to better understand and further analyze the ...
Tuesday, 18 February 20
ADARO SHIPPED 27 PERCENT OF ITS TOTAL COAL PRODUCTION IN 2019 TO INDIA AND CHINA
PT Adaro Energy Tbk (AE) produced 58.03 Mt of coal from PT Adaro Indonesia (AI), Balangan Coal Companies and Adaro Me ...
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- Siam City Cement - Thailand
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Australian Coal Association
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- London Commodity Brokers - England
- Minerals Council of Australia
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- Indika Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- IEA Clean Coal Centre - UK
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- SMG Consultants - Indonesia
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Economic Council, Georgia
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Indonesian Coal Mining Association
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Price Waterhouse Coopers - Russia
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- ASAPP Information Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- The University of Queensland
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Timah Investasi Mineral - Indoneisa
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- Latin American Coal - Colombia
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
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