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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, 23 September 22
CHINA DIGS DEEP TO RAISE COAL OUTPUT TO RECORD HIGH - REUTERS
China’s coal production has surged this year as the government seeks to improve energy security by reducing dependence on imports and amassin ...
Friday, 23 September 22
EUROPEAN STEEL BUYERS SEEK DIRECTION IN VOLATILE MARKET - MEPS INTERNATIONAL
Demand for steel is slow to recover, after the summer break. Mill production costs continue to increase. Steel purchasers are uncertain about the f ...
Friday, 23 September 22
BUOYANT COAL INDUSTRY SEEKS WAYS TO STAY IN THE LONG-TERM ENERGY MIX - REUTERS
There’s no doubt that the global coal industry has been a major beneficiary of Russia’s invasion of Ukraine and the subsequent energy c ...
Friday, 23 September 22
MARKET INSIGHT - INTERMODAL
In view of the forthcoming winter, Europe is trying to escape from its energy (oil & gas) dependency from Russia to ensure energy abundance eve ...
Tuesday, 20 September 22
CHINA'S DAILY COAL OUTPUT HITS 3-MONTH LOW IN AUGUST ON RAINS, COVID CURBS - REUTERS
China’s daily coal output in August slipped to a three-month low as some mines in its biggest coal mining regions reduced operations or even ...
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- Karbindo Abesyapradhi - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Indika Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Billiton Holdings Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- Sojitz Corporation - Japan
- Planning Commission, India
- Chamber of Mines of South Africa
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Borneo Indobara - Indonesia
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Banpu Public Company Limited - Thailand
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Larsen & Toubro Limited - India
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