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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, 25 September 18
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Coal prices are not supposed to be rising as governments tighten environmental controls but that’s precisely what is happening at the premium ...
Saturday, 22 September 18
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Saturday, 22 September 18
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Saturday, 22 September 18
FITCH RATINGS: WORLD GROWTH FORECAST CUT ON US-CHINA TRADE BATTLE
Protectionist US trade policies have now reached the point where they are materially affecting what remains a strong global growth outlook, with th ...
Tuesday, 18 September 18
COOLING OUTLOOK FOR COAL - KATE JONES
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- Krishnapatnam Port Company Ltd. - India
- Aditya Birla Group - India
- Economic Council, Georgia
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Petron Corporation, Philippines
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- Maheswari Brothers Coal Limited - India
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
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- Planning Commission, India
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- Energy Development Corp, Philippines
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- London Commodity Brokers - England
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- Global Coal Blending Company Limited - Australia
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- Electricity Authority, New Zealand
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- Indian Energy Exchange, India
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- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
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- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
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- Bhatia International Limited - India
- Romanian Commodities Exchange
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- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
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- Bukit Makmur.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Parliament of New Zealand
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- Australian Commodity Traders Exchange
- Australian Coal Association
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- Medco Energi Mining Internasional
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- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
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- Miang Besar Coal Terminal - Indonesia
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
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- Chamber of Mines of South Africa
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- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
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- Global Green Power PLC Corporation, Philippines
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- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
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- Anglo American - United Kingdom
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- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
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- GVK Power & Infra Limited - India
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- IEA Clean Coal Centre - UK
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- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
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- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
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- Independent Power Producers Association of India
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- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
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- Singapore Mercantile Exchange
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