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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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Wednesday, 08 September 21
MARKET INSIGHT - INTERMODAL
Last August was extremely hot in the dry bulk market with rates rising at levels that we have years to witness. The dry bulk index exceeded the 4,0 ...
Wednesday, 01 September 21
KOMIPO TO BUY 1.56 MILLION TONS OF 5600 NAR COAL OF AUSTRALIA OR SOUTH AFRICAN ORIGIN FOR 2022 - 2024
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) has issued an international tender for total 1,560,000 MT of Bituminous Coal to be used a ...
Wednesday, 01 September 21
MARKET INSIGHT - INTERMODAL
As the summer season is coming to an end, the dry bulk market continues to rally. The confidence that the outstanding freight market performance ha ...
Monday, 30 August 21
68% OF U.S. COAL FLEET RETIREMENTS SINCE 2011 WERE PLANTS FUELED BY BITUMINOUS COAL - EIA
In 2011, the United States had 317.6 gigawatts (GW) of coal-fired electric generation capacity. About 88.7 GW of that capacity was retired in the d ...
Friday, 27 August 21
ALL YOU NEED TO KNOW ABOUT COAL'S MASSIVE RALLY AND NEAR-TERM OUTLOOK - CNBCTV18
Australia’s thermal coal at Newcastle Port, the benchmark for the vast Asian market, has surged over 100 percent this year to trade above $16 ...
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- Sarangani Energy Corporation, Philippines
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- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Dalmia Cement Bharat India
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
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- Metalloyd Limited - United Kingdom
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- Ministry of Transport, Egypt
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- SMC Global Power, Philippines
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- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
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- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- Ministry of Mines - Canada
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
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- Banpu Public Company Limited - Thailand
- GMR Energy Limited - India
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- Tata Chemicals Ltd - India
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- Kumho Petrochemical, South Korea
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Minerals Council of Australia
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
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- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Thai Mozambique Logistica
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- Sinarmas Energy and Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Romanian Commodities Exchange
- Eastern Coal Council - USA
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- White Energy Company Limited
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- Ministry of Finance - Indonesia
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- Vedanta Resources Plc - India
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