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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, 01 October 10
COAL TRADERS POWER FOREIGN ASSET BUYS - ECONOMIC TIMES
Economic Times reported that, the rush to own coal assets is leading to innovative alliances. are teaming up with utilities like , Reliance Power an ...
Thursday, 30 September 10
LOW CALORIFIC VALUE COAL MAY BE SOLD BELOW COAL REFERENCE PRICE IN INDONESIA
COALspot.com: Indonesia, the world’s largest coal exporter has issued another ministerial decree to regulate the selling price of coal of Indo ...
Thursday, 30 September 10
INITIAL PHASE OF MOATIZE MINING BY EARLY NOVEMBER - ALL AFRICA
All Africa report that, the initial phase of mining coal at Moatize, in the western Mozambican province of Tete, will begin by early November, and t ...
Thursday, 30 September 10
THE PANAMAX CONTINUED ITS DOWNWARD TREND FROM LAST WEEK - FEARNBULK
HANDY
Activity remains slow this week combined with a lack of fresh enquiry and tonnage over-supply in the Atlantic. Indexes are all negative exce ...
Thursday, 30 September 10
INDONESIAN COAL FOR POWER PLANT - LANKA GAZETTE
Lanka Gazette reported that, A cargo vessel with coal on board to generate electricity for the Norochcholai Coal Power Plant will arrive in Sri Lank ...
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- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- Latin American Coal - Colombia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Kobexindo Tractors - Indoneisa
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Sinarmas Energy and Mining - Indonesia
- The University of Queensland
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Price Waterhouse Coopers - Russia
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- CNBM International Corporation - China
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Sakthi Sugars Limited - India
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- PTC India Limited - India
- Leighton Contractors Pty Ltd - Australia
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
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