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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, 28 June 24
INDIAN POWER STATIONS STOCKED WITH BUMPER COAL SUPPLY AS TRANSPORT WOES EASE - BUSINESS STANDARD
Even as power demand has touched a historic high of 250 gigawatts (Gw) amid sweltering heat this June, India’s power stations are stocked wit ...
Friday, 28 June 24
INDIA'S CY23 COAL USE LARGER THAN NORTH AMERICA, EUROPE COMBINED - THE HINDU
For the first time, India’s coal consumption surpassed that of North America and Europe combined in the calendar year 2023, said Energy Insti ...
Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Althoug ...
Monday, 24 June 24
INDIA'S COAL-BASED POWER DEMAND AT ALL-TIME HIGH, GOVERNMENT SAYS - REUTERS
India’s demand for coal-based power has risen by 7.3% this fiscal year to an all-time high, the government said in a statement on Wednesday.
...
Monday, 24 June 24
CHINA'S COAL INDUSTRY TURNS GREENER THROUGH INNOVATIVE APPROACHES - PEOPLE'S DAILY
At an opencast mine operated by Inner Mongolia Pingzhuang Coal Group Co. Ltd., a subsidiary of CHN Energy Investment Group (CHN Energy), a 14-meter ...
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- Vedanta Resources Plc - India
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Therma Luzon, Inc, Philippines
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- Renaissance Capital - South Africa
- Heidelberg Cement - Germany
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bhatia International Limited - India
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Price Waterhouse Coopers - Russia
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Larsen & Toubro Limited - India
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Jindal Steel & Power Ltd - India
- SMG Consultants - Indonesia
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Star Paper Mills Limited - India
- CIMB Investment Bank - Malaysia
- Semirara Mining Corp, Philippines
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
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