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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, 18 May 20
TAKING ADVANTAGE OF VIRUS DISTRACTION - BALTIC EXCHANGE
As the industry grapples to deal with exceptional Covid-19-related challenges, a deeper threat is coming to the fore. At this time of crisis, more ...
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Monday, 18 May 20
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Sunday, 17 May 20
A 55,000 OPEN ILIGAN FIXING AT $6,500 VIA INDONESIA REDELIVERY INDIA - BALTIC BRIEFING
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Friday, 15 May 20
CHINA'S COAL CONSUMPTION TO FALL Y/Y IN SECOND QUARTER, IMPROVEMENT EXPECTED IN SECOND HALF - INDUSTRY BODY: REUTERS
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- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- Directorate General of MIneral and Coal - Indonesia
- Electricity Generating Authority of Thailand
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- The University of Queensland
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Orica Australia Pty. Ltd.
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- White Energy Company Limited
- GMR Energy Limited - India
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- International Coal Ventures Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Oldendorff Carriers - Singapore
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- Minerals Council of Australia
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
- India Bulls Power Limited - India
- Central Electricity Authority - India
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Economic Council, Georgia
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- Romanian Commodities Exchange
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Global Green Power PLC Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Bhoruka Overseas - Indonesia
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
- Bayan Resources Tbk. - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
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