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