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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, 06 March 20
COLOMBIAN COAL OUTPUT FELL 2% IN 2019 - REUTERS
Coal production in Colombia, the fifth-largest coal exporter in the world, fell 2% to 82.2 million tonnes in 2019 after output at one of the princi ...
Friday, 06 March 20
SOLID BACKING FOR LNG AS A MARINE FUEL - BALTIC EXCHANGE
When it comes to choosing the best fuel on the near horizon to help the international shipping industry shrink its carbon intensity by 2050, DNV GL ...
Friday, 06 March 20
INDONESIA COAL PRICE REFERENCE UP AGAIN THIS MONTH
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Thursday, 05 March 20
PANAMAX: SHIP-OWNERS HAVE MOSTLY BEEN GETTING HIGHER RATES THAN THE LAST DONE - FEARNLEYS
Cape
There is still limited amount of positive news around, with the effects of Corona virus hurting world economy. However, overall average in ...
Thursday, 05 March 20
COAL IMPORTS DOWN IN MAJOR ASIAN MARKETS, AND CORONAVIRUS NOT THE DRIVING FORCE - CLYDE RUSSELL
Asia’s seaborne coal markets stumbled in February and it appears the coronavirus outbreak in China may dodge most of the blame, with the weak ...
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- Siam City Cement PLC, Thailand
- Wilmar Investment Holdings
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Riau Bara Harum - Indonesia
- Manunggal Multi Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- India Bulls Power Limited - India
- The University of Queensland
- Power Finance Corporation Ltd., India
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Standard Chartered Bank - UAE
- Georgia Ports Authority, United States
- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Ambuja Cements Ltd - India
- Mercuria Energy - Indonesia
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- VISA Power Limited - India
- Romanian Commodities Exchange
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
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