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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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Wednesday, 16 December 09
INDONESIA'S FIRST PRIVATE RAILWAY TO BOOST RAK'S MINING INTERESTS
MEC infra to invest $1b in construction of 130-km transport link
A 130-kilometre railway that will ease the transport of raw materials and finish ...
Tuesday, 15 December 09
KOMIPO HAS ISSUED A NEW TENDER FOR 30000 MT OF 5200 NAR KCAL/KG COAL
COALspot.com (South Korea): South Korean state-owned utility Korea Midland Power (KOMIPO) has issued an new tender for prompt supply of 30000 M ...
Tuesday, 15 December 09
CHINA CUTS IMPORT DUTIES ON COAL, RAISES FOR OTHERS
China will lower import duties on more than 600 products next year, including coal, naphtha and phosphate ore, the Finance Ministry said on Tuesday. ...
Tuesday, 15 December 09
NTPC'S COAL WOES UNLIKELY TO END SOON
State-owned power producer NTPC’s woes over shortages of coal may not end soon. Though the company is importing 12.5 million tonnes of coal&nb ...
Monday, 14 December 09
RICHARDS BAY COAL TO FINISH EXPANSION IN 1ST QUARTER
Richards Bay Coal Terminal, which ships more than a quarter of Europe’s energy coal, said it will complete its Phase 5 expansion project in th ...
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- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Meralco Power Generation, Philippines
- Siam City Cement PLC, Thailand
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- MS Steel International - UAE
- Indian Energy Exchange, India
- Minerals Council of Australia
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Binh Thuan Hamico - Vietnam
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
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