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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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- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- Siam City Cement PLC, Thailand
- Sindya Power Generating Company Private Ltd
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- Kalimantan Lumbung Energi - Indonesia
- New Zealand Coal & Carbon
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- White Energy Company Limited
- CNBM International Corporation - China
- Wilmar Investment Holdings
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- GMR Energy Limited - India
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- Eastern Energy - Thailand
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Ministry of Mines - Canada
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- ICICI Bank Limited - India
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Mercator Lines Limited - India
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Carbofer General Trading SA - India
- Cement Manufacturers Association - India
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- Economic Council, Georgia
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
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