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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, 20 June 16
CS COAL INDICES CONTINUE UPWARD TREND SINCE END APRIL
COALspot.com: Average 5000 GAR coal index of Indonesian origin was up again by 0.05 percent week over week to averaging $39.39 per ton this past we ...
Monday, 20 June 16
THE BDI HAS FELL 23 POINTS WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities declined this past week. The BDI was fell 3.77 percent fr ...
Friday, 17 June 16
CHINA'S NEW POLICY TO REDUCE WASTE IN RENEWABLE ENERGY - FITCH
Chinese renewable energy producers are likely to benefit from a new policy that guarantees a minimum amount of solar and wind power is purchased in ...
Friday, 17 June 16
KOMIPO INVITES BIDS FOR BITUMINOUS COAL FOR BORYEONG POWER PLANT
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 780,000 Metric Tons of Bituminous Coal for its B ...
Friday, 17 June 16
U.S WEEKLY COAL PRODUCTION UP 7.7% - EIA
COALspot.com – U.S., the world’s one of the largest coal producer has produced approximately totalled an estimated 12.9 million short t ...
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- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Semirara Mining Corp, Philippines
- Parry Sugars Refinery, India
- PTC India Limited - India
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- VISA Power Limited - India
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Latin American Coal - Colombia
- Economic Council, Georgia
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- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
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- Simpson Spence & Young - Indonesia
- Chamber of Mines of South Africa
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- Electricity Authority, New Zealand
- ICICI Bank Limited - India
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Energy Development Corp, Philippines
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- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Xindia Steels Limited - India
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Kideco Jaya Agung - Indonesia
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- Parliament of New Zealand
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Anglo American - United Kingdom
- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
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- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
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- Wilmar Investment Holdings
- Bhushan Steel Limited - India
- Gujarat Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Wood Mackenzie - Singapore
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Deloitte Consulting - India
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- Agrawal Coal Company - India
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Antam Resourcindo - Indonesia
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Ministry of Mines - Canada
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