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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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Friday, 24 April 20
COAL INDIA TO PRODUCE 710 MT COAL - MINISTER OF COAL AND MINES
Coal India Limited (CIL) will produce 710 million tonnes (MT) of coal and company’s coal off take target will also remain at710 MT for this f ...
Friday, 24 April 20
CHINA COAL PRODUCER YANZHOU COAL POSTS 9.6 PCT RISE IN 2019 NET PROFIT - XINHUA
China’s major coal producer Yanzhou Coal Mining Co., Ltd. said Thursday that its net profit saw a 9.6 percent rise in 2019.
Th ...
Tuesday, 21 April 20
INDONESIA ACCOUNTS FOR 19% OF JAPAN'S TOTAL COAL IMPORTS - BANCHERO COSTA
Coal trade in Asia is proving remarkably resilient this year, despite the global economic impact from COVID-19.
We have seen China&r ...
Tuesday, 21 April 20
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KNOWLEDGE TO ELEVATE
Whilst the plight of cruise ships, stranded off shore with sick passengers and crew, may be dominating media headlines, t ...
Monday, 20 April 20
SUPRAMAX: A 52,000DWT SHIP FIXING AN INDONESIA COAL RUN TO CHINA AT $4400 - BALTIC BRIEFING
Capesize
This week was the strongest period seen for the Capesize market in several months. All routes globally succumbed to improved sentiment ...
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- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Straits Asia Resources Limited - Singapore
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Australian Coal Association
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Petron Corporation, Philippines
- The University of Queensland
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Videocon Industries ltd - India
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Mercuria Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- TeaM Sual Corporation - Philippines
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Romanian Commodities Exchange
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