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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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Monday, 28 September 20
NEW LNG PROJECTS - ALL DRESSED UP AND NO PLACE TO GO - WOOD MACKENZIE
It was meant to be another boom year. After a record 70 mmtpa of new LNG capacity was sanctioned in 2019, at least as much capacity was lined up fo ...
Thursday, 24 September 20
SUPRAMAX: INDO TO INDIA FIXING AROUND US$13,000 - FEARNLEYS
Cape
Over the last week the iron ore segment from Brazil to China has picked up, and we see freight rates up USD 2 (12%) week on week Fearnleys ...
Thursday, 24 September 20
KOREA MIDLAND POWER TO BUY 1.92 MILLION TONS OF 4,300-4,700 NCV COAL FOR THREE YEARS
COALspot.com: Korea Midland Power Co. Ltd, has issued an International tender for 640,000 MT 4,300-4,700 kcal/kg NCV coal per year.
...
Wednesday, 23 September 20
VIETNAM'S NEW POWER DEVELOPMENT PLAN MUST OPTIMIZE RENEWABLES AND AVOID FOSSIL FUEL LOCK-IN: IEEFA
EVN’s financial constraints leaves the utility with little room for error
Implementing Vietnam’s soon-to-be-launched next Power De ...
Wednesday, 23 September 20
MARKET INSIGHT - INTERMODAL
Undoubtedly, this year (ongoing) will never be forgotten because in a matter of months it has managed to severely affect and shape our day to day p ...
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- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Thiess Contractors Indonesia
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Georgia Ports Authority, United States
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- The University of Queensland
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Dalmia Cement Bharat India
- Kideco Jaya Agung - Indonesia
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Sinarmas Energy and Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Latin American Coal - Colombia
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