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