India To Initiate Bilateral Talks With Indonesia Over Export Duty Hike On Coal (31-Jan-2012)
Amendments in coal export policy by Indonesia have coerced the Indian Government to consider taking up the issue bilaterally with the coal exporting nation. Indonesia is one of the biggest exporters of coal to India accounting for more than 50% of imports followed by Australia and South Africa.
Recently, the Indonesian government, in its attempt to encourage base metal and coal downstream industry development in its country, has decided to impose export duty on coal and minerals from 2012 and a total ban from the year 2014. Also, it wants to discourage export of coal without any value addition and has, therefore, imposed a ban on exports of coal with low calorific value (below 5,100 kcal/kg) unless these are upgraded to medium grade (5,700 kcal/kg and more). The regulation also states that coal exports from the country have to be benchmarked with the Indonesian government's export price, which has recently been raised.
This is expected to considerably impact the Indian coal industry as India imports coal grades from 5,000 kcal/kg to as low as 3,500 kcal/kg from Indonesia. Coal with energy value of 5,100 kcal/kg or less comprised 41.21 % of Indonesia's total coal exports in 2011. Moreover the Planning Commission had said that the domestic coal demand is set to rise to 1,000 million tonnes, from 5550-600 MT now, during the XII Plan, which will lead to an import of 200 million tonnes to bridge the shortfall in the country's production. India on its part is looking to increase the target for additional production by Coal India (CIL). If the environment issues are sorted out, CIL can increase its coal production by 100 MT, conservatively speaking, for the 12th Five-Year Plan Period. Coal production could also go up to 160 MT.
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