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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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Monday, 01 February 16
INDONESIA'S SECOND LARGEST COAL MINER ADARO ENERGY HAS PRODUCED 51.46 MT IN 2015; 8% LOWER COMPARED TO FY14
COALspot.com: Adaro Energy, the Indonesia’s second largest coal producer by volume has produced 51.46 Mt in 2015, 8% lower compared to ...
Sunday, 31 January 16
BDI CONTINUED ITS FALL AND CLOSE AT A FRESH RECORD LOW ON FRIDAY
COALspot.com: The Baltic Dry Index, which gauges the cost of shipping dry bulk including iron ore, cement, grain, coal and fertilizer, continued it ...
Friday, 29 January 16
INDONESIAN BENCHMARK COAL PRICE SETTLES DOWN $ 0.31, OR 0.58%, AT $ 53.20 A TON
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price further down in January 2016. HBA has slumped by 0.58 ...
Friday, 29 January 16
U.S. COAL PRODUCTION OFF 2 PERCENT FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.1 milli ...
Thursday, 28 January 16
COAL REMAINS THE NO.1 FUEL FOR POWER GENERATION - EXXONMOBIL
COALspot.com: Energy demand trends from 2010 to 2040 are expected to vary significantly around the world, as countries move along very different tr ...
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- Central Electricity Authority - India
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Global Business Power Corporation, Philippines
- PowerSource Philippines DevCo
- Globalindo Alam Lestari - Indonesia
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- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
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- Toyota Tsusho Corporation, Japan
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- Sinarmas Energy and Mining - Indonesia
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- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Straits Asia Resources Limited - Singapore
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- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Eastern Energy - Thailand
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- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
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- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
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- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
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- Jaiprakash Power Ventures ltd
- Metalloyd Limited - United Kingdom
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- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Rio Tinto Coal - Australia
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Bayan Resources Tbk. - Indonesia
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- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
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- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
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- Siam City Cement - Thailand
- Bhatia International Limited - India
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- GMR Energy Limited - India
- White Energy Company Limited
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Parliament of New Zealand
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- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Wilmar Investment Holdings
- Commonwealth Bank - Australia
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Port Waratah Coal Services - Australia
- Rashtriya Ispat Nigam Limited - India
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Aditya Birla Group - India
- Agrawal Coal Company - India
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- MS Steel International - UAE
- Gujarat Sidhee Cement - India
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- Bangladesh Power Developement Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- Bhushan Steel Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
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- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
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