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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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Thursday, 28 January 10
COAL - VIETNAM / TRADE
Vietnam expects to turn into a coal importer within three years, spurred by an industrial boom and rising power consumption, a senior executive with ...
Thursday, 28 January 10
JAPAN STEELMAKERS OPPOSE QUARTERLY COAL CONTRACTS
Japanese steelmakers oppose miner BHP Billiton's attempt to switch to quarterly contracts from annual deals for supplying coal, as the change would ...
Thursday, 28 January 10
BHP MAY SELL 25% STAKE IN INDONESIAN COAL PROJECT
BHP Billiton Ltd. plans to sell only a 25 percent stake in a coal project in Indonesia as it wants to retain control of the asset, said Indra Dianna ...
Thursday, 28 January 10
TRANSNET ASPIRES TO 81MT/Y COAL EXPORT CAPACITY
South African State-owned rail transport enterprise Transnet wants to increase coal-line rail capacity to 81-million tons a year as part of its Quan ...
Wednesday, 27 January 10
ASIA'S 2010 STEAM COAL IMPORTS TO REACH 460 MLN T
* China to import up to 100 mln T of steam coal in 2010
* China, India seen investing in southern Africa assets
Asian imports of steam coal will ...
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- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Sical Logistics Limited - India
- PTC India Limited - India
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- CNBM International Corporation - China
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Australian Coal Association
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Kepco SPC Power Corporation, Philippines
- White Energy Company Limited
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
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