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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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Friday, 15 January 10
ADARO INDONESIA STILL TOPS IN INDONESIAN COAL EXPORT RANKING
COALspot.com (Indonesia): PT. Adaro Indonesia, the world first Envirocoal producer and Indonesia's second largest thermal coal producer is top coal ...
Friday, 15 January 10
NTPC TO ADD 6,000 MW EACH YEAR IN 12TH PLAN
Will raise total generation capacity to 75,000 Mw by 2017, up from 30,644 Mw at present.
India's largest power generator NTPC, which will launch ...
Friday, 15 January 10
POSCO SAYS 2010 COKING COAL AGREEMENT MAY BE DELAYED - BLOOMBERG
Posco, South Korea’s biggest steelmaker, said an agreement on coking coal prices for this year may be delayed because major suppliers of the s ...
Friday, 15 January 10
CHINA POWER FIRMS SEEK COAL IMPORTS, SUPPLY SCARCE
China's coal-hungry power plants have turned to imported coal to cope with widespread shortages, but spot supply is scarce, traders said on Thursda ...
Thursday, 14 January 10
INDONESIA POWER REDUCES COAL SUPPLY
PT Indonesia Power will reduce coal supplies from PT Tambang Batu Bara Bukit Asam to its Suralaya Power Plant. "The coal supply for the plant s ...
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- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- The University of Queensland
- Wilmar Investment Holdings
- Economic Council, Georgia
- Jorong Barutama Greston.PT - Indonesia
- Minerals Council of Australia
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Intertek Mineral Services - Indonesia
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Australian Coal Association
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- Antam Resourcindo - Indonesia
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Indika Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Larsen & Toubro Limited - India
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- PTC India Limited - India
- Star Paper Mills Limited - India
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
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