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