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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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Wednesday, 31 January 24
CHINA'S INNER MONGOLIA COAL OUTPUT HIT 1.21B TONS IN 2023 - XINHUA
North China’s Inner Mongolia autonomous region churned out 1.21 billion tons of coal in 2023 as it strives to guarantee the country’s e ...
Wednesday, 31 January 24
GAS EXPORTS COST U.S. CONSUMERS MORE THAN $100 BILLION OVER 16-MONTH PERIOD - IEEFA
Limited Demand Growth Could Dampen the Dry Bulk Market in the Coming Months BIMCOStarting in late 2021—before its invasion of Ukraine—R ...
Tuesday, 30 January 24
LIMITED DEMAND GROWTH COULD DAMPEN THE DRY BULK MARKET IN THE COMING MONTHS - BIMCO
Demand
In our base scenario, we expect cargo demand to grow by 0-1% in 2024 and 0.5-1.5% in 2025. This is a 0.5 percentage point reduction for ...
Friday, 26 January 24
RED SEA DIVERSIONS ADD NEARLY A MILLION DOLLARS PER VOYAGE TO SHIPPING COSTS WHILE DOUBLING TRANSIT TIME - LSEG
The incremental costs of diverting a tanker from Asia to NW Europe via the Cape of Good Hope is accounting for an extra $932,905 USD per voyage whi ...
Friday, 26 January 24
HARD COAL GUARDIAN ANGEL OF THE ENERGY SUPPLY - GERMANY COAL IMPORTERS ASSOCIATION
- No security of supply without hard coal
- The Substitute Power Plant Provision Act (EKBG) must be extended
- Higher grid fees due to the ...
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- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- South Luzon Thermal Energy Corporation
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Sojitz Corporation - Japan
- Gujarat Sidhee Cement - India
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- European Bulk Services B.V. - Netherlands
- Bharathi Cement Corporation - India
- Dalmia Cement Bharat India
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Bangladesh Power Developement Board
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- White Energy Company Limited
- London Commodity Brokers - England
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