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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, 21 January 10
HANDYMAX - SHORT PERIOD OWNERS IDEAS ARE AROUND MID/LOW 20S - FEARNLEYS AS
HANDY
The BSI moved in a downward direction since last Friday reflecting minor a ...
Thursday, 21 January 10
ASF GROUP TO COMMENCE COAL SALES TO CHINA BY FEBRUARY 2010
Sydney-based China energy and resource conduit, ASF Group has struck an agreement to supply coal to China.
In September 2009, ASF announced a ven ...
Thursday, 21 January 10
INDONESIA BUKIT ASAM AGREES ON LOWER COAL PRICE
Indonesian state coal miner PT Tambang Batubara Bukit Asam Tbk has agreed with a local power plant to set 2010 coal prices at 23 percent lower than ...
Thursday, 21 January 10
CABOTAGE POLICY POSTPONED
The Transportation Ministry has decided to postpone for one year the full enforcement of the cabotage principle – a maritime term for the proh ...
Thursday, 21 January 10
MEC IN TALKS WITH TATA POWER ON COAL - TRADE
The UAE's Middle East Coal is in talks to supply coal to Tata Power, India's biggest private sector power firm, from its new Indonesian operations ...
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Straits Asia Resources Limited - Singapore
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- Central Electricity Authority - India
- Australian Coal Association
- The Treasury - Australian Government
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- SN Aboitiz Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- Chettinad Cement Corporation Ltd - India
- Bulk Trading Sa - Switzerland
- Leighton Contractors Pty Ltd - Australia
- Wilmar Investment Holdings
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- SMG Consultants - Indonesia
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Tamil Nadu electricity Board
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Billiton Holdings Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- The University of Queensland
- ICICI Bank Limited - India
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mjunction Services Limited - India
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
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