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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, 14 December 18
KOSPO INVITED BIDS FOR 320,000 MT OF LOW CALORIFIC VALUE COAL
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 320,000 MT of min 4,300 kcal/kg NCV coal per ...
Friday, 14 December 18
KOSPO INVITES BIDS FOR 1,177,000 METRIC TONS OF COAL FOR Q1' 19 LOADING
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 701,000 MT of min 5,600 kcal/kg NCV coal and ...
Friday, 14 December 18
COAL IMPORT TO BE CHECKED BY RISING DOMESTIC PRODUCTION - FINANCIAL EXPRESS
The government’s effort to increase domestic coal production and power demand falling with the onset of the winters will check coal imports, ...
Thursday, 13 December 18
STRAITS AFFECTED BY TERRITORIAL DISPUTE BETWEEN SINGAPORE AND MALAYSIA - THE STANDARD CLUB
A recent territorial dispute has occurred between Singapore and Malaysia involving the Straits of Johor.
The Malaysian Attorney Gene ...
Wednesday, 12 December 18
SHIPPING MARKET INSIGHT - CHRISTOPHER WHITTY
China’s monthly iron ore imports dropped for the first time this year joined by declines in copper and soybeans as economic growth slows in t ...
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- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- PTC India Limited - India
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Manunggal Multi Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- Africa Commodities Group - South Africa
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Indika Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Indogreen Group - Indonesia
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Singapore Mercantile Exchange
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
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