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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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Thursday, 09 May 19
OFFSHORE CARIBBEAN CONGRESS 2019
Offshore Caribbean Congress 2019
Event Date: 4-5th July. 2019t
Location: Georgetown, Guyana
Hess announced a new d ...
Tuesday, 07 May 19
UNDOUBTEDLY A VERY TROUBLED YEAR FOR THE DRY BULK MARKET, SAYS ALLIED SHIPPING
Undoubtedly a very troubled year for the dry bulk market says Allied Shipping in its latest weekly report.
Thomas Chasapis, Re ...
Saturday, 04 May 19
HOW THE 'FAIR VALUE' OF COAL ASSETS IS AFFECTED BY COMMODITY CYCLES - CRU
As with any commodity, valuing coal assets can be tricky due to the cyclical nature of the market. In this insight, CRU discusses how commodity cyc ...
Friday, 03 May 19
SUPRAMAX: WITH WIDESPREAD HOLIDAYS DURING THE WEEK, THE MARKET LACKED IMPETUS - BALTIC BRIEFING
Capesize
The market last week was a tale of two halves, with substantial volatility. Beginning the week on a positive note the C5 West Australi ...
Friday, 03 May 19
COAL INDIA APRIL OUTPUT RISES 1% TO 45.29 MILLION TONNE - PTI
Coal India Ltd (CIL) Wednesday said its coal production in April 2019 rose by 1 per cent to 45.29 million tonne as compared with 44.86 million tonn ...
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- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Thai Mozambique Logistica
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Agrawal Coal Company - India
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Wilmar Investment Holdings
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- IEA Clean Coal Centre - UK
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Mjunction Services Limited - India
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- Central Electricity Authority - India
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
- Renaissance Capital - South Africa
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
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