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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, 23 September 11
ICMA TO BUILD UPGRADE FACILITIES TO ANTICIPATE BAN ON LOW-GRADE COAL EXPORT BY 2014
COALspot.com - January to August of this year, Indonesia’s coal production had already reached 235 million tons. Earlier estimates had targete ...
Friday, 23 September 11
UT TO PRODUCE 7 MMT OF COAL BY 2012
PT United Tractors Tbk is targeting a 7 million tons of coal production next year, a 55.55% increase from 4.5 millions targeted this year, said Pres ...
Friday, 23 September 11
RECORD RECYCLING ACTIVITY STIRS OPTIMISM IN DRY BULK SAYS BIMCOS ANALYSIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As expected at the start of the year, dry bulk ship owners were expected to flock scrapyards around the world, in order to take advantage of attract ...
Friday, 23 September 11
PANAMAX EXPERIENCED A SOFTENING IN RATES - FEARNLEYS AS
Handy
Still a good boost of fresh cargoes entering the market. Vessels in Black Sea with GOA clearance and Baltic positions are fetching tick abov ...
Wednesday, 21 September 11
INDIA'S COAL IMPORTS FROM INDONESIA FALL, CHINA BUYS MORE
COALspot.com - Indian coal imports from Indonesia fall to below 6 million tons in August, and this fall was continuing last few months. Ho ...
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- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Planning Commission, India
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Economic Council, Georgia
- Coal and Oil Company - UAE
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- White Energy Company Limited
- South Luzon Thermal Energy Corporation
- The University of Queensland
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Bhushan Steel Limited - India
- Holcim Trading Pte Ltd - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Makarim & Taira - Indonesia
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
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