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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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Thursday, 29 April 10
KANGAROO RESOURCES INKS KEY COAL EXPORT CONTRACT WITH YUDEAN FARNON - PROACTIVE INVESTORS
Proactive Investors reprted that, Kangaroo Resources has secured an initial export sales contract for coal from the company’s operating coal p ...
Wednesday, 28 April 10
UNITED TRACTORS FOCUSES ON MINING AS IT SEEKS TO DIVERSIFY REVENUE SOURCES - JG
The Jakarta globe reported that, PT United Tractors, Indonesia’s biggest heavy-equipment distributor and mining contractor, aims to have its m ...
Wednesday, 28 April 10
DRY BULK MARKET
After a prolonged period of anticipation and a stalled dry bulk market in terms of freight rates, the industry’s benchmark, the Baltic Dry Ind ...
Tuesday, 27 April 10
CAPESIZES UP, PANAMAXES DOWN - BRS
It was Capesizes up, Panamaxes down this week as the latter experienced a correction after its recent gains. Period rates for Panamaxes remain firm ...
Tuesday, 27 April 10
S.KOREA EWP SEEKS 0.520 MILLION TONS OF SUB-BITUMINOUS COAL
COALspot.com: South Korea East West Power Company has called for term bids for supply of Sub-bituminous Coal for Dangjin Thermal Power Pla ...
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- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Medco Energi Mining Internasional
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- The University of Queensland
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- Australian Coal Association
- Indian Oil Corporation Limited
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Planning Commission, India
- ASAPP Information Group - India
- MS Steel International - UAE
- SMC Global Power, Philippines
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Oldendorff Carriers - Singapore
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Eastern Energy - Thailand
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- India Bulls Power Limited - India
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Vijayanagar Sugar Pvt Ltd - India
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
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