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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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Sunday, 08 January 23
ELEVATED COAL PRICE A DRAG ON MARGINS OF DOMESTIC BASE METAL PLAYERS: ICRA
The increased price of coal continue to be a drag on the margin of domestic base metal players with no immediate relief in sight, rating agency ICR ...
Monday, 02 January 23
CHINA’S COAL CONSUMPTION TO PEAK BY 2035: REPORT - REUTERS
China’s primary energy consumption is likely to peak at nearly 6.03 billion tonnes of standard coal between 2030 and 2035, refining giant Chi ...
Thursday, 29 December 22
INDIA'S COAL DEMAND LIKELY TO PEAK BETWEEN 2030-2035: MINISTER - ANI
The demand for coal in India will continue and is likely to peak between 2030-2035, Union Minister of Coal, Mines, and Parliamentary Affairs Pralha ...
Thursday, 29 December 22
RIO TINTO AND PARTNERS COULD RECEIVE AS MUCH AS $450M IN GOVERNMENT COMPENSATION FOR COAL PRICE CAP - THE GUARDIAN
Compensation payments for the Gladstone power plant remain the sticking point in the federal government’s coal price cap compensation negotia ...
Wednesday, 28 December 22
MARKET INSIGHT - INTERMODAL
The United Nations Conference on Trade and Development (UNCTAD) published a Global Trade Update on December 13th highlighting that global trade wou ...
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- Karaikal Port Pvt Ltd - India
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- Coal and Oil Company - UAE
- Port Waratah Coal Services - Australia
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- Xindia Steels Limited - India
- Renaissance Capital - South Africa
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
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- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
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- Bayan Resources Tbk. - Indonesia
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- Singapore Mercantile Exchange
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- Global Business Power Corporation, Philippines
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- Medco Energi Mining Internasional
- London Commodity Brokers - England
- Central Java Power - Indonesia
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- Wilmar Investment Holdings
- White Energy Company Limited
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- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Bulk Trading Sa - Switzerland
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Planning Commission, India
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Malabar Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Banpu Public Company Limited - Thailand
- Gujarat Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
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- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- Central Electricity Authority - India
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- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- Australian Commodity Traders Exchange
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Siam City Cement PLC, Thailand
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Indonesian Coal Mining Association
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
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- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Coal Blending Company Limited - Australia
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
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