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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, 23 September 19
CHINA RECORDS SLOWER GROWTH IN COAL PRODUCTION - XINHUA
The growth of China’s raw coal production slowed down in August, data from the National Bureau of Statistics (NBS) showed.
Aro ...
Friday, 20 September 19
INDIA TO INVITE BIDS FOR COMMERCIAL COAL MINING IN DECEMBER - MINISTER FOR COAL
India aims to begin the process of holding the first round of commercial coal mining auctions December end, Minister for Coal, Mines and Parliament ...
Friday, 20 September 19
INDIA: ECONOMIC SLOWDOWN IMPACTS COAL IMPORT CARGO IN H1 FY20 - PTI
Economic slowdown has impacted coal import cargo in the first half of this fiscal, as overall cargo growth at major ports registered a marginal gro ...
Wednesday, 18 September 19
SHIPPING MARKET INSIGHT - INTERMODAL
During the first week of September, I had the privilege of attending the Donsö Shipping Meet 2019, in Donsö, a small island of around 1,& ...
Tuesday, 17 September 19
PANAMA SHIP REGISTRY MODERNIZES SHIP REGISTRATION
The Panama Ship Registry has announced it will integrate in a single platform “Electronic Ship Registration System (ESRS)” the present ...
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- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- PTC India Limited - India
- PowerSource Philippines DevCo
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- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
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- Thai Mozambique Logistica
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Australian Coal Association
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- White Energy Company Limited
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Trasteel International SA, Italy
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- Maheswari Brothers Coal Limited - India
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- The University of Queensland
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- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
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