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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, 29 May 15
COAL PRODUCTION IN THE U.S. ALMOST FLAT THIS PAST WEEK
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 16.1 million short ...
Friday, 29 May 15
SOUTH KOREAN STATE-OWNED UTILITY KOREA MIDLAND POWER INVITES BIDS FOR 780K MT OF COAL FOR H2' 15
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 780K Metric Tons (MT) of HCV and LCV ...
Thursday, 28 May 15
TIMEBAR FOR DEMURRAGE CLAIMS - SKULD
KNOWLEDGE TO ELEVATE
English law has traditionally had a strict approach to contractually agreed time bars between commercial parties as well ...
Wednesday, 27 May 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
Earlier in the year I looked at how the market was reacting to the prolonged fall of the price of oil. Back then it was still unclear if the fallin ...
Tuesday, 26 May 15
HOW HAS THE DROP IN OIL PRICES AFFECTED OTHER COMMODITIES? - CLYDE & CO
KNOWLEDGE TO ELEVATE
The effects of the dramatic drop in the price of both Ice March Brent, the international oil marker, and its US counterpa ...
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- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Samtan Co., Ltd - South Korea
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- OPG Power Generation Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Karaikal Port Pvt Ltd - India
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Iligan Light & Power Inc, Philippines
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Medco Energi Mining Internasional
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Latin American Coal - Colombia
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- The University of Queensland
- Antam Resourcindo - Indonesia
- Xindia Steels Limited - India
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Economic Council, Georgia
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- Sakthi Sugars Limited - India
- Tamil Nadu electricity Board
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- CNBM International Corporation - China
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