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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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Tuesday, 19 July 11
82 MIO TONS OF COAL TO BE SUPPLIED FOR DOMESTIC MARKET
Indonesian Coal miners were required to supply 82 million tons of coal to Domestic market in this year. This is a 2.53 percent higher than last year ...
Monday, 18 July 11
IMFA BUYS A INDONESIAN COAL MINE FOR USD 8.7 M
Indian Metals and Ferro Alloys (IMFA), the largest producer of ferro chrome in the country, today said it has acquired 70 per cent stake in an Indones ...
Sunday, 17 July 11
THE COAL PRICES ARE SOFTENING DUE TO LESS DEMAND - VISTAAR
COALspot.com: The markets were down last week with BDI down by 6.63 points and closing at 1,353 points. The most affected was Cape index which was d ...
Friday, 15 July 11
DRY BULK MARKET SUFFERS NEW BLOW, RETREATS EVEN FURTHER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market fell even lower yesterday on the back of lower demand for larger vessels, like Capesizes and Panamaxes. The industry’s ben ...
Friday, 15 July 11
BUKIT ASAM 1H COAL SALES UP 44 PERCENT
The state-controlled PT Tambang Batubara Bukit Asam Tbk (PTBA) is estimated to post 6.5 million tons of coal sales in the first half of this year, a ...
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- Heidelberg Cement - Germany
- Electricity Authority, New Zealand
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- Commonwealth Bank - Australia
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- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- PTC India Limited - India
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- White Energy Company Limited
- Australian Coal Association
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- Marubeni Corporation - India
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
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- Economic Council, Georgia
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- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
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- Kumho Petrochemical, South Korea
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- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Agrawal Coal Company - India
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- Planning Commission, India
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- Chamber of Mines of South Africa
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- Makarim & Taira - Indonesia
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- Sical Logistics Limited - India
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- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
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- Bahari Cakrawala Sebuku - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
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- Bangladesh Power Developement Board
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- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Minerals Council of Australia
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- The Treasury - Australian Government
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- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
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- GN Power Mariveles Coal Plant, Philippines
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
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- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
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- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
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- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
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- Directorate General of MIneral and Coal - Indonesia
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- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- International Coal Ventures Pvt Ltd - India
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- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
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- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Power Finance Corporation Ltd., India
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Bhoruka Overseas - Indonesia
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
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- Sakthi Sugars Limited - India
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
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