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