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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, 13 October 22
OPEC DOWNGRADES CRUDE OIL DEMAND, AS WORLD ECONOMY ENTERS SLOWDOWN
Crude Oil Price Movements
The OPEC Reference Basket (ORB) declined m-o-m by $6.58 in September, or 6.5%, to average $95.32/b. Pressure from equ ...
Wednesday, 12 October 22
MARKET INSIGHT - INTERMODAL
Sale and Purchase activity during the first three quarters of 2022 has been remarkable.
Focusing only on Tankers and Bulkers, such v ...
Monday, 10 October 22
ENERGY TRANSITION BOOSTS GLOBAL LONG-TERM DEMAND FOR METALS - FITCH RATINGS
The energy transition will significantly increase demand for metals used in manufacturing of electric vehicles (EVs) and renewable power generation ...
Monday, 10 October 22
GLOBAL CEOS EXPECT IMPENDING RECESSION TO BE 'SHORT AND SHARP,' POLL SHOWS - CNBC
Global CEOs are anticipating a recession in the next 12 months, according to a new survey by professional services firm KPMG, which said more than ...
Thursday, 06 October 22
AUSTRALIA’S RESOURCES REVENUE TO HIT RECORD AMID UKRAINE CONFLICT - REUTERS
Australian resources and energy export earnings are forecast to jump 7% to a record A$450 billion ($290 billion) this fiscal year, bolstered by soa ...
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- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- PTC India Limited - India
- Renaissance Capital - South Africa
- Therma Luzon, Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- Economic Council, Georgia
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- Planning Commission, India
- Anglo American - United Kingdom
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- Indonesian Coal Mining Association
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- MS Steel International - UAE
- Australian Coal Association
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Latin American Coal - Colombia
- Gujarat Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Meralco Power Generation, Philippines
- The State Trading Corporation of India Ltd
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- The University of Queensland
- Formosa Plastics Group - Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
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