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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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Monday, 19 December 22
ENERGY CRISIS FUELS COAL COMEBACK IN GERMANY - REUTERS
Coal has made a comeback in Germany this year, as Europe’s largest economy turns to the dirty fuel to power it through an energy crisis.
...
Thursday, 15 December 22
MARKET INSIGHT - INTERMODAL
While observing the ship repair market very close to the end of the year, we are confident that shipyards worldwide are entering a new era. The nex ...
Tuesday, 13 December 22
STRONG COAL PRICES SUPPORT ROBUST EARNINGS AT INDONESIAN COAL MINERS - FITCH RATINGS
Fitch Ratings expects cash flow generation at Indonesian coal miners to remain strong in 2023, based on its forecast for coal prices to remain high ...
Tuesday, 13 December 22
BIMCO CII CLAUSE FINALLY RELEASED: DOES IT MAKE ANY SENSE OF CCI? - WFW
WHAT IS CII?
The new International Maritime Organisation’s (“IMO’s”) Carbon Intensity Indicator (“CII”) cer ...
Tuesday, 13 December 22
COAL BASE RAMPS UP ENERGY SUPPLY FOR WINTER NEEDS - XINHUA
Inner Mongolia Autonomous Region, China’s leading coal production base, has kicked its production into high gear to meet heating needs as col ...
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- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Planning Commission, India
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- White Energy Company Limited
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Oldendorff Carriers - Singapore
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- Neyveli Lignite Corporation Ltd, - India
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Aditya Birla Group - India
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