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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, 28 June 24
INDIAN POWER STATIONS STOCKED WITH BUMPER COAL SUPPLY AS TRANSPORT WOES EASE - BUSINESS STANDARD
Even as power demand has touched a historic high of 250 gigawatts (Gw) amid sweltering heat this June, India’s power stations are stocked wit ...
Friday, 28 June 24
INDIA'S CY23 COAL USE LARGER THAN NORTH AMERICA, EUROPE COMBINED - THE HINDU
For the first time, India’s coal consumption surpassed that of North America and Europe combined in the calendar year 2023, said Energy Insti ...
Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Althoug ...
Monday, 24 June 24
INDIA'S COAL-BASED POWER DEMAND AT ALL-TIME HIGH, GOVERNMENT SAYS - REUTERS
India’s demand for coal-based power has risen by 7.3% this fiscal year to an all-time high, the government said in a statement on Wednesday.
...
Monday, 24 June 24
CHINA'S COAL INDUSTRY TURNS GREENER THROUGH INNOVATIVE APPROACHES - PEOPLE'S DAILY
At an opencast mine operated by Inner Mongolia Pingzhuang Coal Group Co. Ltd., a subsidiary of CHN Energy Investment Group (CHN Energy), a 14-meter ...
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- Simpson Spence & Young - Indonesia
- Siam City Cement - Thailand
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- Wilmar Investment Holdings
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Romanian Commodities Exchange
- PTC India Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- Parry Sugars Refinery, India
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- GMR Energy Limited - India
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- ASAPP Information Group - India
- The University of Queensland
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Ministry of Transport, Egypt
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