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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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Tuesday, 20 April 10
INDO HARUM ENERGY WINS US$200MN LOAN PLEDGE FROM BANK SYNDICATE
Indonesian coal producer PT Harum Energy has secured a loan commitment of US$200 million from a syndicate of six banks.
Bank of Tokyo Mitsubishi ...
Tuesday, 20 April 10
PACIFIC SUPRA MARKET WAS STILL SOFTENING - BRS
A modest increase in dry bulk rates this week with activity picking up in the middle of the week. Panamax rates remain above the Capes, and there wa ...
Monday, 19 April 10
IS CHINA TO SUFFER NEW COAL SUPPLY SHORTAGE IN 2010? - XINHUA
Is China likely to suffer a new coal supply shortage in 2010? It's a question haunting many Chinese market analysts now. After a string of several ...
Monday, 19 April 10
WHITE ENERGY BUYS SA COAL - ABC NET
ABC Net reported that, South Australian Coal Limited is being bought by the New South Wales company White Energy.
Shareholders will get a combine ...
Monday, 19 April 10
PLN TO OPERATE COAL MINES IN BID TO FUEL POWER PLANTS
The Jakarta Globe reported that, state electricity utility PT Perusahaan Listrik Negara said on Sunday that it aimed to take over operation of small ...
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- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- Global Business Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Planning Commission, India
- GVK Power & Infra Limited - India
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Indonesian Coal Mining Association
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- PTC India Limited - India
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- Orica Mining Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Parliament of New Zealand
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- ICICI Bank Limited - India
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