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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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Wednesday, 21 September 11
2ND ANNUAL SHALE GAS SUMMIT
2nd Annual Shale Gas Summit 31 October – 3 November 2011 JW Marriott Hotel, Hong Kong
According to a recent EI ...
Tuesday, 20 September 11
MTD INAUGURATES ITS COAL TERMINAL IN JAVA ISLAND
Press Release – MTD Group of Malaysia, one of prominent key players in the development of infrastructure in Malaysia, today inaugurated their ...
Tuesday, 20 September 11
DRY BULK MARKET LOSING ITS EDGE, RETREATING AT THE START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
After a surge during the past couple of weeks, which saw Capesize earnings boosted and the BDI (Baltic Dry Index) reaching levels of year high and c ...
Monday, 19 September 11
CHINA IMPORTS MORE THAN 10 MMT INDO COAL IN AUGUST 2011
COALspot.com - Indonesian coal exports dropped 1.642 million tons in August compared to July exports. Indonesia exports 29.662 million tons of coal ...
Monday, 19 September 11
INDOMOBIL ENTERING INTO COAL MINING BUSINESS
COALspot.Com- PT Indomobil Sukses Internasional Tbk, part of, one of Indonesia's largest conglomerates, to enter into mining industry ac ...
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- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
- SMC Global Power, Philippines
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- Cement Manufacturers Association - India
- Bukit Asam (Persero) Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Riau Bara Harum - Indonesia
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- The Treasury - Australian Government
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
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