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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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Tuesday, 11 April 23
OIL RISES ON CHINA STIMULUS EXPECTATIONS, WEAKER DOLLAR - REUTERS
Oil prices rose on Tuesday on expectations of potential economic stimulus by China, healthy demand in the rest of Asia and a drop in U.S. crude sto ...
Sunday, 09 April 23
CHINA’S BUSINESS INCOME REBOUND POINTS TO IMPROVING ECONOMY: OFFICIAL - XINHUA
Chinese businesses have posted a strong rebound in sales revenue since the beginning of this year in the latest signal of an improving economy.
...
Sunday, 09 April 23
COAL INDIA TO BOOST SUPPLIES TO INDUSTRIES AS UTILITIES’ INVENTORIES RISE - REUTERS
Coal India Ltd will increase supplies to industries, the world’s largest coal miner said on Wednesday as fuel inventories at utilities run by ...
Thursday, 06 April 23
MARKET INSIGHT - INTERMODAL
LNG Current Supply/Demand Dynamics
This year, LNG supply will likely exceed demand, so prices will need to decline to levels that will encourag ...
Sunday, 26 March 23
EUROPE’S RUSH TO LNG COULD TURN INTO 'WORLD’S MOST EXPENSIVE AND UNNECESSARY INSURANCE POLICY'- CNBC
Europe’s rapid buildout of liquefied natural gas infrastructure is on track to far exceed demand by the end of the decade, according to new r ...
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- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- Billiton Holdings Pty Ltd - Australia
- Latin American Coal - Colombia
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
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