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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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Tuesday, 18 June 19
TANKER SHIPPING: WHILE WE WAIT FOR 2020 TO KICK IN, IT'S ALL ABOUT POLITICS - BIMCO
Demand drivers and freight rates
Iran, Libya and Venezuela face export limitations because of sanctions and internal political troubles. At the s ...
Saturday, 15 June 19
SUPRAMAX: A 58,000-TONNER, OPEN QINGDAO, WAS BOOKED TO REDELIVER IN EAST COAST INDIA AT $6,500 - BALTIC BRIEFING
Capesize
The market closed on a quiet Friday last week after a few hectic days of mid-week trading. Trade routes from Brazil to the Far East we ...
Friday, 14 June 19
PANAMAX: OUTLOOK IS MIXED - FERNLEYS
Capesize
Sentiment changed to a more nervous tone as pacific cargo volumes failed to deliver as expected, however latest activity indicates res ...
Friday, 14 June 19
ELECTRONIC (PAPERLESS) TRADING - SKULD
KNOWLEDGE TO ELEVATE
Electronic Shipping Solutions: Bolero International Ltd, E-Title Authority Pte Ltd, Global Share S.A. (edoxOnline platfor ...
Wednesday, 12 June 19
KOSPO INVITES BIDS FOR 140,000 MT OF 4,600 NCV COAL FOR SEP. 2019 LOADING
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 140,000 MT of minimum 4,600 kcal/kg NCV coal ...
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- India Bulls Power Limited - India
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- Gujarat Sidhee Cement - India
- SN Aboitiz Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- PTC India Limited - India
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- PetroVietnam Power Coal Import and Supply Company
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- The University of Queensland
- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- Deloitte Consulting - India
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Indian Energy Exchange, India
- Parliament of New Zealand
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- Renaissance Capital - South Africa
- VISA Power Limited - India
- Marubeni Corporation - India
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
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