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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, 29 March 21
MOODY'S: OUTLOOK FOR GLOBAL METALS AND MINING INDUSTRY TURNS POSITIVE ON HIGHER EBITDA IN PANDEMIC'S WAKE
- Demand for steel, iron ore and copper will rise, while aluminum, nickel and zinc will remain in surplus
- EBITDA is expected to ...
Thursday, 25 March 21
'OMNIBUS LAW' REGULATION ON INDONESIA’S ENERGY AND MINING SECTORS TO BOOST COAL PROCESSING BUT ALSO RAISES QUESTIONS - ABNR
February 2021 saw the issuance of a raft of new government regulations to give effect to the reformist Job Creation Law (colloquially known as the ...
Thursday, 25 March 21
PROPOSED SWITCH FROM COAL TO LNG THREATENS RENEWABLE ENERGY DEVELOPMENT IN ASIA - IEEFA
Renewables offer an ever cheaper, financially sustainable and energy secure alternative, better able to support developing nations
A ...
Thursday, 25 March 21
MAJOR INVESTMENT ADVISORS BLACKROCK AND MEKETA PROVIDE A FIDUCIARY PATH THROUGH THE ENERGY TRANSITION - IEEFA
BlackRock and Meketa say divestment from fossil fuels improves, not weakens, investment returns
Two major financial management firms ...
Thursday, 25 March 21
EUROPE PASSES MILESTONE WITH HALF OF COAL PLANTS CLOSED OR SET TO RETIRE BY 2030 - EURACTIV
Half of Europe’s 324 coal-fueled power plants have either closed or announced a retirement date before 2030, it emerged on Monday (22 March) ...
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- Thai Mozambique Logistica
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Deloitte Consulting - India
- Bangladesh Power Developement Board
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Anglo American - United Kingdom
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- McConnell Dowell - Australia
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Australian Coal Association
- Agrawal Coal Company - India
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ICICI Bank Limited - India
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- New Zealand Coal & Carbon
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- Interocean Group of Companies - India
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- CNBM International Corporation - China
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
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