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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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Saturday, 30 August 14
INDIAN GOVERNMENT SHOULD TAKE NOTICE: THERMAL COAL IMPORT PRICES EXTREMELY LOW - COMMODORE RESEARCH
COALspot.com: Both Indonesian and Australian thermal coal prices are at the lowest levels seen this decade, with Indonesia's monthly benchmark ...
Saturday, 30 August 14
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Friday, 29 August 14
U.S. WEEKLY COAL PRODUCTION DROPS 1.3 PERCENT, EIA SAYS
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Friday, 29 August 14
ADARO'S PROFITS SINK FURTHER AMID FALL IN COAL PRICES - JP
Adaro Energy, one of the country’s largest coal miners, has reported a 31 percent drop in net profit in the first half of this year as global ...
Friday, 29 August 14
CHINESE LIGNITE IMPORTS: QUANTITY OVER QUALITY? - CLARKSONS
In the first half of 2014, Chinese seaborne coal imports declined 0.4% y-o-y to 148mt, largely reflecting a 3.3% fall in imports of steam coal. Mea ...
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- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
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- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
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- Planning Commission, India
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
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- Bhoruka Overseas - Indonesia
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- VISA Power Limited - India
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- Neyveli Lignite Corporation Ltd, - India
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- SMG Consultants - Indonesia
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- Global Coal Blending Company Limited - Australia
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- IHS Mccloskey Coal Group - USA
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- London Commodity Brokers - England
- Iligan Light & Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
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- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
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- Mercuria Energy - Indonesia
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- Bhushan Steel Limited - India
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- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
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- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
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- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
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- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
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- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- ASAPP Information Group - India
- Global Business Power Corporation, Philippines
- The University of Queensland
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- Ambuja Cements Ltd - India
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Goldman Sachs - Singapore
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Parliament of New Zealand
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- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
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