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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, 13 March 20
PANAMAX: SLIGHTLY STRONGER NUMBERS IN BOTH BASINS THIS WEEK - FEARNLEYS
Cape
Still very sad times for the big ships, and merit in further trading at present levels is highly debatable for most tonnage. Spot fixtures ...
Friday, 13 March 20
TOP 4 ACCOUNTING CONSIDERATIONS AFTER THE IMPLEMENTATION OF IMO 2020 - PWC
To install or not to install?
Following the IMO 2020 global low sulphur cap for marine fuel effective since 1 January 2020, many shi ...
Friday, 13 March 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Friday, 13 March 20
KOREA SOUTH-EAST POWER INVITED BIDS FOR 390,000 MT OF THERMAL COAL FOR MAY-JUNE 2020 LOADING
COALspot.com: Korea South-East Power Co., Ltd. (KOEN), has issued an international tender for total 390,000 Metric Tons of coal for May & June ...
Thursday, 12 March 20
INDIA 2019 THERMAL COAL IMPORTS RISE 12.6% TO NEARLY 200 MILLION TONNES - REUTERS
India’s thermal coal imports rose 12.6% to nearly 200 million tonnes in 2019, government data reviewed by Reuters showed, reflecting the seco ...
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- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- Independent Power Producers Association of India
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Planning Commission, India
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- Interocean Group of Companies - India
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Manunggal Multi Energi - Indonesia
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- The University of Queensland
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
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