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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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Thursday, 17 December 20
CHINA'S BAN IS LESS OF A THREAT TO AUSTRALIA'S COAL INDUSTRY THAN INTERNATIONAL CLIMATE AMBITION - IEEFA
Australian coal exporters will survive this near-term political fight but there are longterm structural headwinds
The decision by Ch ...
Thursday, 17 December 20
BUMA SIGNED US$1.0 BILLION WORTH OF EXTENSION CONTRACT WITH BERAU COAL
PT Bukit Makmur Mandiri Utama, subsidiary of PT Delta Dunia Makmur Tbk., has extended its mining services contracts with PT Berau Coal, in relation ...
Wednesday, 16 December 20
INDONESIA 2020 COAL CONSUMPTION ESTIMATED AT 140-145 MLN TONNES - OFFICIAL, REUTERS REPORTED
Indonesia’s domestic coal consumption is estimated at 140-145 million tonnes this year, Dodik Ariyanto, an official at the energy ministry, t ...
Wednesday, 16 December 20
RUSSIA REVISES DOWN EXPORT EXPECTATION - FITCH
The Ministry of Economy of Russia, the world’s third largest thermal coal exporting country, released its annual forecasts ...
Wednesday, 16 December 20
INDIAN COAL IMPORTS TO REMAIN SUBDUED - FITCH RATINGS
Fitch Rating commented on Indian Coal Imports, Fitch said, coal imports by Indian utilities fell by about 24% yoy to 44 million tonnes (mt) i ...
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- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- The Treasury - Australian Government
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Vedanta Resources Plc - India
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- Billiton Holdings Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Sindya Power Generating Company Private Ltd
- Barasentosa Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Economic Council, Georgia
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Kobexindo Tractors - Indoneisa
- Eastern Coal Council - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Gujarat Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Planning Commission, India
- Indika Energy - Indonesia
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Iligan Light & Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- Trasteel International SA, Italy
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