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