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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, 28 May 10
INDIAS NEYVELI LIGNITE EYEING INDONESIA, SOUTH AFRICA COAL MINES
Integrated mining and power producer Neyveli Lignite Corporation Thursday said it is exploring possibilities for buying coal mines in Indonesia and ...
Friday, 28 May 10
ADARO ACQUIRES 25% ICP AT US$ 335 MIO
Indonesia's second largest thermal coal miner PT Adaro Energy Tbk (ADRO) today announces formation of new joint venture for Indonesian Coal Project ...
Thursday, 27 May 10
KPCL IS LOOKING FOR 0.50 MLN TON TO IMPORTED STEAMING COAL FOR RAICHUR THERMAL POWER STATION
COALspot.com: KARNATAKA POWER CORPORATION LIMITED, India invited from reputed parties meeting the pre qualifications stipulated for the import ...
Thursday, 27 May 10
TNPL TO BUY 0.240 MLN TON NON-COKING COAL FOR SECOND HALF OF 2010
COALspot.com: Tamil Nadu Newsprint and Papers Limited (TNPL), would like to procure 0.24 mln MT of imported Non-Coking Coal in 6 Shipments of about ...
Thursday, 27 May 10
DRY BULK RATES REACH 2010 HIGHS, BUT FUTURE REMAINS UNCERTAIN
This week is proving to be a milestone for the dry bulk market, as the Baltic Dry Index has propelled itself at never before seen levels for 2010. Y ...
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- Eastern Coal Council - USA
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- PTC India Limited - India
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- The University of Queensland
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Kumho Petrochemical, South Korea
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- Sakthi Sugars Limited - India
- Banpu Public Company Limited - Thailand
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- Altura Mining Limited, Indonesia
- Electricity Generating Authority of Thailand
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Trasteel International SA, Italy
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Global Coal Blending Company Limited - Australia
- Minerals Council of Australia
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Global Green Power PLC Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
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