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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, 19 March 10
COAL INDIA TO HIT CAPITAL MARKETS IN JULY
India’s largest coal producer, Coal India Ltd (CIL), expects to hit the capital markets by July, company chairman Partha S. Bhattacharyya said ...
Thursday, 18 March 10
COAL IMPORTS SOAR IN NANTONG PORT OF JIANGSU PROVINCE CHINA
BloombergUTV reported that, Coal imports at Nantong Port, located in coastal China's Jiangsu Province, soared 13 times to 581,000 tonnes in the fir ...
Thursday, 18 March 10
INNER MONGOLIA TO CAP COAL OUTPUT AT 700 MLN TONS IN 2010
Alibaba / China Knowledge reported that, Inner Mongolia, China's northern border autonomous region, plans to control coal output at 700 million ton ...
Thursday, 18 March 10
THE INDIAN MARKET WAS QUIET, BUT BECAUSE OF THE TIGHT TONNAGE SITUATION STILL FIRM - FEARNLEYS AS
Handy
Activity continues to be solid in the Atlantic.
Supramax physical market is strong which pushed the BSI to a 17 month high at ...
Thursday, 18 March 10
INDONESIAN COAL PRODUCTION EXPECTED TO BEAT EARLIER FORECAST
The Jakarta Globe reported that, the government expects coal output this year to exceed its initial projection of 250 million metric tons as the dri ...
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- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Xindia Steels Limited - India
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- SMC Global Power, Philippines
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Aboitiz Power Corporation - Philippines
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- Planning Commission, India
- Mercator Lines Limited - India
- Merrill Lynch Commodities Europe
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- Deloitte Consulting - India
- Eastern Coal Council - USA
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Barasentosa Lestari - Indonesia
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Independent Power Producers Association of India
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- New Zealand Coal & Carbon
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Mercuria Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Indian Energy Exchange, India
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- OPG Power Generation Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Petron Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
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