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