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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, 15 October 21
GLOBAL STEEL DEMAND GROWTH DOWNGRADED FOR 2021 DUE TO CHINA - WORLD STEEL ASSOCIATION
The World Steel Association (worldsteel) today released an update of its Short Range Outlook (SRO) for 2021 and 2022. worldsteel forecasts that ste ...
Thursday, 14 October 21
SPIKING COAL PRICES: DON’T BLAME THE ENERGY TRANSITION - IEEFA
Volatility highlights urgency for renewables-based energy solutions
“Energy crisis.” The phrase evokes nearly-forgotten ...
Thursday, 14 October 21
EIA FORECASTS U.S. COAL PRODUCTION TOTALS 588 MMST IN 2021, UP 53 MMST YOY
U.S. coal production in EIA's forecasts totals 588 million short tons (MMst) in 2021, 53 MMst more than in 2020.
According ...
Wednesday, 13 October 21
COAL PRICES ARE ROARING BACK AMID A GLOBAL ENERGY CRUNCH - SYDNEY MORNING HERALD
Soaring coal prices have placed Australia’s mining and energy exports on track to reach a record $349 billion this year evenas the value of t ...
Wednesday, 13 October 21
CHINA ISN'T THE ONLY HUGE ASIAN ECONOMY WITH A COAL SHORTAGE NOW - CNBC
China is not the only Asian giant grappling with an energy crunch — India is also teetering on the edge of a power crisis.
Mos ...
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- Thai Mozambique Logistica
- Indogreen Group - Indonesia
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- MS Steel International - UAE
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Renaissance Capital - South Africa
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Georgia Ports Authority, United States
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Chettinad Cement Corporation Ltd - India
- Kumho Petrochemical, South Korea
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Madhucon Powers Ltd - India
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Dalmia Cement Bharat India
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- The University of Queensland
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Sindya Power Generating Company Private Ltd
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- PTC India Limited - India
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Link Ltd, New Zealand
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- VISA Power Limited - India
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
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