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