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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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Tuesday, 12 May 20
A GLOBAL ECONOMIC RESTART HAS SLOWLY BEGUN AS COUNTRIES AROUND THE WORLD GRADUALLY - ALLIED
A global economic restart has slowly begun as countries around the world gradually set their return back to “normality”. Yet by all mea ...
Tuesday, 12 May 20
CAN INDONESIA'S COAL INDUSTRY SURVIVE COVID-19? : IEEFA
Pandemic Lockdown and Slumping Prices Put Extreme Pressure on Coal Miners
Executive Summary
While attention has been focused on th ...
Tuesday, 12 May 20
INDIA'S COAL PRODUCTION TO CLOCK RECORD 700 MILLION TONNES IN FY21: COAL SECRETARY - PTI
Coal Secretary Anil Jain said FY20 coal production was lower than the target of 660 million tonnes because of flooding of a key coal mine.
&nbs ...
Monday, 11 May 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Monday, 11 May 20
CORONAVIRUS PUTS MORE THAN A THIRD OF SEABORNE COAL SUPPLY AT RISK - WOOD MACKENZIE
The full impact of the coronavirus outbreak on the global economy is yet unclear. However, the demand destruction is already becoming evident, with ...
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- GN Power Mariveles Coal Plant, Philippines
- Altura Mining Limited, Indonesia
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- The University of Queensland
- Chamber of Mines of South Africa
- Rio Tinto Coal - Australia
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
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- Gujarat Electricity Regulatory Commission - India
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- Standard Chartered Bank - UAE
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- New Zealand Coal & Carbon
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- Tamil Nadu electricity Board
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- Interocean Group of Companies - India
- Bangladesh Power Developement Board
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- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- Renaissance Capital - South Africa
- CNBM International Corporation - China
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- CIMB Investment Bank - Malaysia
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
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- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
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- Gujarat Sidhee Cement - India
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
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- IEA Clean Coal Centre - UK
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- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
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- Bulk Trading Sa - Switzerland
- Wilmar Investment Holdings
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- Port Waratah Coal Services - Australia
- Planning Commission, India
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- Ministry of Transport, Egypt
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- Medco Energi Mining Internasional
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- Minerals Council of Australia
- Energy Development Corp, Philippines
- Toyota Tsusho Corporation, Japan
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- Dalmia Cement Bharat India
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- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
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- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
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- Economic Council, Georgia
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- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Latin American Coal - Colombia
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
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- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
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- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
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- Kideco Jaya Agung - Indonesia
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- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Australian Coal Association
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- Parliament of New Zealand
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- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
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- Aditya Birla Group - India
- MS Steel International - UAE
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
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- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Singapore Mercantile Exchange
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