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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, 29 May 15
COAL PRODUCTION IN THE U.S. ALMOST FLAT THIS PAST WEEK
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 16.1 million short ...
Friday, 29 May 15
SOUTH KOREAN STATE-OWNED UTILITY KOREA MIDLAND POWER INVITES BIDS FOR 780K MT OF COAL FOR H2' 15
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 780K Metric Tons (MT) of HCV and LCV ...
Thursday, 28 May 15
TIMEBAR FOR DEMURRAGE CLAIMS - SKULD
KNOWLEDGE TO ELEVATE
English law has traditionally had a strict approach to contractually agreed time bars between commercial parties as well ...
Wednesday, 27 May 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
Earlier in the year I looked at how the market was reacting to the prolonged fall of the price of oil. Back then it was still unclear if the fallin ...
Tuesday, 26 May 15
HOW HAS THE DROP IN OIL PRICES AFFECTED OTHER COMMODITIES? - CLYDE & CO
KNOWLEDGE TO ELEVATE
The effects of the dramatic drop in the price of both Ice March Brent, the international oil marker, and its US counterpa ...
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- Pendopo Energi Batubara - Indonesia
- PTC India Limited - India
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Bhatia International Limited - India
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- VISA Power Limited - India
- Deloitte Consulting - India
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Bhushan Steel Limited - India
- Central Electricity Authority - India
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Indika Energy - Indonesia
- Planning Commission, India
- Central Java Power - Indonesia
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Bukit Baiduri Energy - Indonesia
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- Kumho Petrochemical, South Korea
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Cement Manufacturers Association - India
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Global Business Power Corporation, Philippines
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- PNOC Exploration Corporation - Philippines
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Rio Tinto Coal - Australia
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Australian Coal Association
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
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