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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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Wednesday, 17 February 10
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Tuesday, 16 February 10
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The start of the Chinese New Year had an immediate impact on rates and for once all the dry bulk segments lost similar ground.
The BDI fell 5%, a ...
Tuesday, 16 February 10
LAW POSES THREAT TO INDONESIA'S COAL INDUSTRY
A zoning law could cost coal miners billions of dollars this year alone, hurt investment in the industry and disrupt the supply of the fuel to the c ...
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- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- Maheswari Brothers Coal Limited - India
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- South Luzon Thermal Energy Corporation
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Bukit Baiduri Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Bulk Trading Sa - Switzerland
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- The Treasury - Australian Government
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Planning Commission, India
- Agrawal Coal Company - India
- Simpson Spence & Young - Indonesia
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Economic Council, Georgia
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- Electricity Generating Authority of Thailand
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- The State Trading Corporation of India Ltd
- GMR Energy Limited - India
- Sarangani Energy Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- PTC India Limited - India
- Kideco Jaya Agung - Indonesia
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Kobexindo Tractors - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Petron Corporation, Philippines
- Vizag Seaport Private Limited - India
- The University of Queensland
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Ambuja Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Timah Investasi Mineral - Indoneisa
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- Romanian Commodities Exchange
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Mercuria Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bayan Resources Tbk. - Indonesia
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
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