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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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- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Indian Energy Exchange, India
- Timah Investasi Mineral - Indoneisa
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Parliament of New Zealand
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- The University of Queensland
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kapuas Tunggal Persada - Indonesia
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- PTC India Limited - India
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
- Pendopo Energi Batubara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- MS Steel International - UAE
- Aditya Birla Group - India
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Larsen & Toubro Limited - India
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