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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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In February 2020, Ukraine produced over 2.55 million tonnes of coal, which is 0.2% less than planned.
The Coal Miners Union of Ukrai ...
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- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- The University of Queensland
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Central Electricity Authority - India
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- PTC India Limited - India
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Economic Council, Georgia
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Uttam Galva Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- VISA Power Limited - India
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Mercator Lines Limited - India
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- Agrawal Coal Company - India
- Bulk Trading Sa - Switzerland
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
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