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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, 06 September 24
REBOUND IN OIL DEMAND COULD LIFT MARKET IN LATTER HALF OF 2024 - BIMCO
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Friday, 06 September 24
GLOBAL SEABORNE LNG TRADE HAS CONTINUED TO INCREASE LAST YEAR - BANCHERO COSTA
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Wednesday, 28 August 24
SEABORNE COAL IMPORTS INTO INDIA INCREASED BY +9.9% Y-O-Y TO 146.6 MLN T - BANCHERO COSTA
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Tuesday, 06 August 24
EXERCISE CAUTION WITH AMMONIA SWITCH - BALTIC EXCHANGE
A new study from the Massachusetts Institute of Technology (MIT) has thrown a spanner into the plan to transition ships from diesel fuel to ammonia ...
Friday, 02 August 24
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The recent surge in natural gas and coal prices has been so swift that the main benchmarks were roughly three times higher in 2022Q2 compared to a ...
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- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Thiess Contractors Indonesia
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Port Waratah Coal Services - Australia
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Karaikal Port Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- The University of Queensland
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Kapuas Tunggal Persada - Indonesia
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Posco Energy - South Korea
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Planning Commission, India
- White Energy Company Limited
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Gujarat Sidhee Cement - India
- Karbindo Abesyapradhi - Indoneisa
- The State Trading Corporation of India Ltd
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