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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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Monday, 01 March 10
166 MINING COMPANIES THREATEN ENVIRONMENT
Viva News reported that, the Indonesian Forum for the Environment (Walhi) of East Kalimantan reveals that 166 coal mining companies, which are curre ...
Monday, 01 March 10
IRON ORE PRICE NEGOTIATIONS - 80PCT HIKE SEEN BY CHINESE
China Knowledge quoted an insider from a large Chinese steel company said there will be a significant increase in steel prices in the next few month ...
Sunday, 28 February 10
SUPRAMAX CHARTER RATES FOR ONE YEAR IS AROUND US$ 19,000/20,000 PER DAY - VISTAAR SINGAPORE
COALspot.com : The freight market firmed up by almost 10 pct on Supramax and Handy size and about 7 pct on Panamax.
However it was interesting to ...
Sunday, 28 February 10
MINISTRY SEEKS TWO YEAR DELAY TO IMPLEMENT ENVIRONMENT LAW
The Jakarta Post reported that, The ministry of energy and mineral resources has proposed that the government postpone the implementation of the 200 ...
Sunday, 28 February 10
CONTINENTAL TARGETS COAL SALES FROM S AFRICA MINE IN Q2 - MINING WEEKLY
Mining weekly reported that, Junior coal explorer Continental Coal would start coal sales from its Vlakvarkfontein mine, in South Africa, in the sec ...
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- Renaissance Capital - South Africa
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Kapuas Tunggal Persada - Indonesia
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Ministry of Transport, Egypt
- Oldendorff Carriers - Singapore
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Economic Council, Georgia
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- GAC Shipping (India) Pvt Ltd
- The University of Queensland
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Coalindo Energy - Indonesia
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- PTC India Limited - India
- Ministry of Mines - Canada
- Kartika Selabumi Mining - Indonesia
- Deloitte Consulting - India
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Orica Australia Pty. Ltd.
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- Marubeni Corporation - India
- GMR Energy Limited - India
- Edison Trading Spa - Italy
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