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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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Saturday, 12 December 09
INDONESIA'S COAL RUSH - SOOTY SUCCESS
Rising demand from China and India is stoking Indonesia’s exports of coal
FOR power stations on the coast of China, it is often cheaper to ...
Thursday, 10 December 09
ENVIROCOAL REGISTERED IN 33 COUNTRIES
PT Adaro concerned to register the brand overseas
PT Adaro Energy Tbk has registered the Envirocoal trademark for its coal products in 33 countri ...
Thursday, 10 December 09
INDIA TO IMPORT 28 MILLION TONNE OF STEAM COAL
Faced with short supply of coal from domestic sources, the Indian power ministry has revised upwards its coal import target for the current fiscal t ...
Thursday, 10 December 09
INDONESIA'S NEW MINING LAW WILL NOT LIMIT COAL EXPORTS, SAYS GOVERNMENT
The government will allow coal producers to continue exporting even if they miss domestic sales requirements, a senior mining official said, marking ...
Wednesday, 09 December 09
INDONESIA'S RECAPITAL TO PAY $1.48 BLN FOR BERAU
Recapital Advisors, an Indonesian investment firm, will pay $1.48 billion in cash and notes to buy coal miner PT Berau Coal, $300 million of which i ...
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- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Romanian Commodities Exchange
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- Indian Oil Corporation Limited
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Economic Council, Georgia
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Indika Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Essar Steel Hazira Ltd - India
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- White Energy Company Limited
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- McConnell Dowell - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GN Power Mariveles Coal Plant, Philippines
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Planning Commission, India
- Samtan Co., Ltd - South Korea
- Iligan Light & Power Inc, Philippines
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Parliament of New Zealand
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- London Commodity Brokers - England
- Petron Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kohat Cement Company Ltd. - Pakistan
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Ind-Barath Power Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
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