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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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- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- Kideco Jaya Agung - Indonesia
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Planning Commission, India
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- Holcim Trading Pte Ltd - Singapore
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- Sree Jayajothi Cements Limited - India
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- ICICI Bank Limited - India
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Thai Mozambique Logistica
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Parliament of New Zealand
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- The University of Queensland
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Singapore Mercantile Exchange
- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Central Java Power - Indonesia
- Therma Luzon, Inc, Philippines
- Global Coal Blending Company Limited - Australia
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Chamber of Mines of South Africa
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