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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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Sunday, 20 January 19
OIL MARKET REPORT: A MARATHON, NOT A SPRINT - IEA
Last month, we asked if there was a floor under prices following the signing of a new Vienna Agreement that aims to re-balance the oil market. Foll ...
Thursday, 17 January 19
EIA ESTIMATES THAT U.S. COAL EXPORTS WERE 116 MMST IN 2018, 20% HIGHER THAN THE AMOUNT EXPORTED IN 2017
Coal Supply
EIA estimates that coal production declined by 20 million short tons (MMst) (3%) in 2018, despite a 19 MMst increase in U.S. coal e ...
Thursday, 17 January 19
U.S COAL OUTPUT IS EXPECTED TO FALL BY 3 PER CENT IN 2019 - EIA
EIA forecasts that U.S. coal production will total 729 million short tons (MMst) in 2019, down by 25 MMst (3%) from 2018.
Acco ...
Wednesday, 16 January 19
SHIPPING MARKET INSIGHT - INTERMODAL
As we go through the first days of the year and just a few weeks before the Chinese New Year, the ship repair sector is witnessing a big difference ...
Monday, 14 January 19
KOREA SOUTHERN POWER INVITES BIDS FOR 320,000 MT OF MIN 3,800 NCV COAL
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 320,000 MT of min 3,800 kcal/kg NCV coal for ...
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- Sree Jayajothi Cements Limited - India
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Parliament of New Zealand
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- The University of Queensland
- PTC India Limited - India
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Central Electricity Authority - India
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Deloitte Consulting - India
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- McConnell Dowell - Australia
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