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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, 21 June 23
CHINA'S MAY COAL IMPORTS FROM AUSTRALIA RECOVER TO PRE-BAN LEVELS - REUTERS
Australian coal sales to China increased in May, as trade resumed between them even as overall coal demand weakened against an uncertain macroecono ...
Monday, 19 June 23
DROUGHT-DEPLETED HYDROPOWER DRIVES CHINA TO TURN TO COAL - REUTERS
China has leant hard on coal-fired power plants as well as wind and solar generators to make up for a shortfall in hydroelectric generation as a re ...
Monday, 19 June 23
CHINA COAL OUTPUT UP 4.2 PCT IN MAY - XINHUA
China’s raw coal output posted steady growth in May, official data showed.
The country produced 390 million tonnes of raw coal ...
Wednesday, 24 May 23
AMMONIA-FUELLED BULK CARRIERS WITHIN FIVE YEARS - BALTIC EXCHANGE
Within five years, ships powered by clean ammonia could be a feature on the iron ore trade routes between West Australia and East Asia.
A study ...
Tuesday, 23 May 23
CHINA'S APRIL COAL OUTPUT LEAPS 11% ON YEAR, BUT DEMAND DOWNTURN LOOMS - REUTERS
China’s daily coal output in April jumped 11% from the same month a year earlier, boosted by Beijing’s order to increase supply to ensu ...
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- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
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- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- The University of Queensland
- Sakthi Sugars Limited - India
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Videocon Industries ltd - India
- SN Aboitiz Power Inc, Philippines
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- Essar Steel Hazira Ltd - India
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Antam Resourcindo - Indonesia
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Tamil Nadu electricity Board
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Sindya Power Generating Company Private Ltd
- Binh Thuan Hamico - Vietnam
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- Metalloyd Limited - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- Africa Commodities Group - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- The Treasury - Australian Government
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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