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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, 13 January 21
CHINA THERMAL GENCO PROFITS FACE PRESSURE AMID POWER SHORTAGES - FITHCH WIRE
High coal and gas prices will put near-term pressure on margins for thermal power generators in China, says Fitch Ratings. However, the power short ...
Wednesday, 13 January 21
COAL TO BE BIGGEST CONTRIBUTOR TO INDIA'S $5 TRILLION ECONOMY: AMIT SHAH - BUSINESS STANDARD
The Centre on Monday awarded the letter of allocation to successful bidders of coal mines under the commercial auction held during October-November ...
Monday, 11 January 21
MUTED COAL RECOVERY IN 2021 - BALTIC EXCHANGE
Coal demand is expected to rebound in 2021
Medium-term outlook is less favourable although demand declines are expected to be subtle ...
Sunday, 10 January 21
KOREAN GENCOS INVITED BIDS FOR TOTAL 880,000 TONS OF COAL FOR MARCH 2021 LOADING
COALspot.com: Korea South-East Power Co., Ltd. (KOEN), on behalf of EWP, KOSPO, KOSEP and KOWEPO issued an international tender for total 880 ...
Friday, 08 January 21
INDIA COULD COMPETE AGAINST CHINA IN SOLAR MODULE PRODUCTION WITH THE RIGHT GOVERNMENT SUPPORT - IEEFA
The focus should be on helping manufacturers become globally competitive
Although one of the top 10 solar module producers in the world, India ...
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- Savvy Resources Ltd - HongKong
- White Energy Company Limited
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Maheswari Brothers Coal Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Romanian Commodities Exchange
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Thiess Contractors Indonesia
- IEA Clean Coal Centre - UK
- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Borneo Indobara - Indonesia
- Planning Commission, India
- The University of Queensland
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Indian Energy Exchange, India
- Renaissance Capital - South Africa
- South Luzon Thermal Energy Corporation
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
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