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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, 25 August 10
GOVT SHOULD ALLOW DUTY-FREE IMPORT OF THERMAL COAL: ASSOCHAM
Industry body Assocham Wednesday said the government should allow duty free import of thermal coal to bring down power tariffs in the country.
&q ...
Wednesday, 25 August 10
INDIAS ADANI GROUP TO BUILD COAL RAILWAY IN INDONESIA
COALspot.com: India’s Adani Group, Indonesia’s state coal producer PT Tambang Batubara Bukit Asam (PTBA), and the South Sumatra provinci ...
Wednesday, 25 August 10
CME GROUP WILL LAUNCH NEW COAL CONTRACTS
Press Release: CME Group, the world’s leading and most diverse derivatives marketplace, today announced the launch of trading and clearing ser ...
Tuesday, 24 August 10
INDIA IMPORTS 1.3 MILLION TONS COAL LAST WEEK
COALspot.com: India has imported 1.3 million tons of non - Coking coal and 468,229 Mt of coking coal for the period 16 - 22 August 2010 ...
Monday, 23 August 10
COAL FOR FAST-TRACK PROGRAM ASSURED
Antara and the Jakarta globe reported that, the coal supply for the government’s 10,000 megawatt “fast- track” program was assured ...
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- White Energy Company Limited
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Intertek Mineral Services - Indonesia
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Mercator Lines Limited - India
- Sindya Power Generating Company Private Ltd
- Wilmar Investment Holdings
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Ministry of Finance - Indonesia
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Karbindo Abesyapradhi - Indoneisa
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Australian Coal Association
- PowerSource Philippines DevCo
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Metalloyd Limited - United Kingdom
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- IHS Mccloskey Coal Group - USA
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