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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, 15 February 10
INDONESIA IN TALKS TO RESOLVE BANPU MINE CLOSURE
Indonesia is seeking to resolve a land permiting problem resulting in the closure of a coal mine in Kalimantan operated by a unit of Thailand's top ...
Monday, 15 February 10
PVT ENTRY IN COAL MINING TO BE DELAYED
Entry of private players in coal mining will be delayed. Contrary to expectations, the coal ministry will not move in the Budget session a bill that ...
Sunday, 14 February 10
NEWCASTLE STEAM COAL TRADES AT US$ 91 TO US$ 92
Reuters reported that prompt cargo prices for coal delivered into Europe were largely unchanged recently after a day of subdued trading.
European ...
Saturday, 13 February 10
THE FREIGHT MARKET CONTINUED TO BE WEAK THIS WEEK - CAPT. REDDY
COALspot.com (Singapore): The freight market continued to be weak this week. There have been quite a few spot vessels open Far east and have been fo ...
Saturday, 13 February 10
INDONESIA ISSUES NEW MINING REGULATIONS
Indonesia has issued two new regulations under its mining law to allow firms to start obtaining mining permits, in a move that should increase certa ...
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- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- Australian Coal Association
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Planning Commission, India
- McConnell Dowell - Australia
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Attock Cement Pakistan Limited
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- White Energy Company Limited
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Parliament of New Zealand
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- The University of Queensland
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Deloitte Consulting - India
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karaikal Port Pvt Ltd - India
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- Maheswari Brothers Coal Limited - India
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
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