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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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- Karbindo Abesyapradhi - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Renaissance Capital - South Africa
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Planning Commission, India
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- Economic Council, Georgia
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- ASAPP Information Group - India
- Binh Thuan Hamico - Vietnam
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- Global Green Power PLC Corporation, Philippines
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Gujarat Electricity Regulatory Commission - India
- White Energy Company Limited
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- Indo Tambangraya Megah - Indonesia
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- The University of Queensland
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
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