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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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Saturday, 10 April 10
VESSELS OPEN N. CHINA WERE SEEN FIXED AT HIGH TEENS FOR TRIP VIA INDONESIA TO INDIA - VISTAAR SINGAPORE
COALspot.com: The BDI indices was almost at same levels was down by only 2.6 pct.
The cape index was down by almost 13 pct, which appears to be s ...
Saturday, 10 April 10
KRISHNAPATNAM PORT GROWS BY ALMOST 100% IN ITS SECOND YEAR OF OPERATIONS
COALspot.com ( Press Release): It has been a year of setting numerous records for Krishnapatnam Port. Krishnapatnam Port is only in its second year ...
Saturday, 10 April 10
TRANS-ASIA SEEKS SEMIRARA, INDO SUPPLIERS FOR COAL POWER PLANT - MANILA STANDARD TODAY
Manila Standard Today reported that, Trans-Asia Oil & Energy Development Corp., a unit of the Phinma Group, will tap Semirara Mining Corp. ...
Thursday, 08 April 10
THE FAR EAST SHIPPING MARKET FIRMING SINCE THE LAST WEEK
Handy
Little fresh interest early this week after the holidays. The BSI saw yest ...
Thursday, 08 April 10
INDONESIAN ENERGY MINISTRY SEEKS LONGER MINING CONTRACTS - THE JAKARTAGLOBE
The Jakarta Globe reported that, Energy Minister Darwin Zahedy Saleh said he would seek to amend the mining law to address investors’ complain ...
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- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- GVK Power & Infra Limited - India
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Intertek Mineral Services - Indonesia
- Bhatia International Limited - India
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- IEA Clean Coal Centre - UK
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- Central Electricity Authority - India
- Banpu Public Company Limited - Thailand
- PTC India Limited - India
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- Kobexindo Tractors - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- Dalmia Cement Bharat India
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Central Java Power - Indonesia
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Electricity Generating Authority of Thailand
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- London Commodity Brokers - England
- Parliament of New Zealand
- Malabar Cements Ltd - India
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
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