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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, 30 March 10
PRICES FOR COKING COAL, IRON ORE TO SOAR AMID BURGEONING STEEL DEMAND: SCOTIABANK
Winnipeg Free Press reported that, Strong steel demand from China and a recovery in the developed world will push coking coal prices 56 per ce ...
Sunday, 28 March 10
DEMAND FROM INDIA RESHAPING THE GLOBAL COAL MARKET - DAVE FOREST
Attention international coal industry. There's a new kid on the block.
The nation of India.
India is emerging as a major re-shaping force for ...
Sunday, 28 March 10
SHIPS FROM WC INDIA TO CHINA CONTINUED TO BE FIXED AT HEALTHY LEVELS AT AROUND US$ 50/52,000 PER DAY - VISTAAR
COALspot.com: The dry bulk freight market seemed to be heading for a correction with all the indices dropping by 8-10 pct except for handy size whic ...
Saturday, 27 March 10
CHINA DROUGHT MAY RAISE COAL DEMAND, BOOST PRICES, CLSA SAYS - BLOOMBERG
Bloomberg reported that, Droughts in southwest China may increase demand for coal used in power plants, and ‘support” prices in the &ldq ...
Saturday, 27 March 10
CHINA TO REMAIN NET COAL IMPORTER IN NEAR FUTURE - STEEL GURU
Xinhua News cited Mr Wu Chenghou a councilor with the China Coal Transportation and Marketing Association as saying that China will remain a net coa ...
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- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Agrawal Coal Company - India
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- Altura Mining Limited, Indonesia
- Globalindo Alam Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Sakthi Sugars Limited - India
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- Australian Coal Association
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Bharathi Cement Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Planning Commission, India
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- Sree Jayajothi Cements Limited - India
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
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