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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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Friday, 24 April 20
COAL INDIA TO PRODUCE 710 MT COAL - MINISTER OF COAL AND MINES
Coal India Limited (CIL) will produce 710 million tonnes (MT) of coal and company’s coal off take target will also remain at710 MT for this f ...
Friday, 24 April 20
CHINA COAL PRODUCER YANZHOU COAL POSTS 9.6 PCT RISE IN 2019 NET PROFIT - XINHUA
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Th ...
Tuesday, 21 April 20
INDONESIA ACCOUNTS FOR 19% OF JAPAN'S TOTAL COAL IMPORTS - BANCHERO COSTA
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We have seen China&r ...
Tuesday, 21 April 20
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KNOWLEDGE TO ELEVATE
Whilst the plight of cruise ships, stranded off shore with sick passengers and crew, may be dominating media headlines, t ...
Monday, 20 April 20
SUPRAMAX: A 52,000DWT SHIP FIXING AN INDONESIA COAL RUN TO CHINA AT $4400 - BALTIC BRIEFING
Capesize
This week was the strongest period seen for the Capesize market in several months. All routes globally succumbed to improved sentiment ...
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- Energy Development Corp, Philippines
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Australian Coal Association
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- Grasim Industreis Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Jaiprakash Power Ventures ltd
- Indian Oil Corporation Limited
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- Minerals Council of Australia
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Karaikal Port Pvt Ltd - India
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PTC India Limited - India
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
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