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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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Monday, 07 December 09
CHINA COKING COAL PRICE MAY RISE 14% ON DEFICIT, CITIGROUP SAYS
Coking coal prices in China, the world’s biggest steel producer, may rise 14 percent next year because of a supply deficit, Citigroup Inc. sai ...
Monday, 07 December 09
JSW STEEL TO SELL MOZAMBIQUE COAL MINE FOR RS 300 CRORE
JSW Steel may sell its coal mine in Mozambique to sister company JSW Energy as the mine has become commercially unviable for the steel producer, a t ...
Monday, 07 December 09
BLACK RIDGE MINING ENTERS AGREEMENT WITH INDONESIAN COAL PRODUCER
Australian-listed Black Ridge Mining has entered into an exclusive dealing and non-circumvention agreement with Indonesian coal producer PT. Inmas A ...
Sunday, 06 December 09
THE ECI / CHINA (S7) ROUTE SOFTENED AND WAS AT US$ 25,275 PER DAY - VISTAAR
COALspot.com (Singapore): "The market was bit soft in the beginning of the week, however towards mid week that market started to pick up and th ...
Sunday, 06 December 09
NEW MANGALORE PORT GETS UPCL'S FIRST COAL PARCEL FROM INDONESIA
The Lanco Group-promoted Udupi Power Corporation Ltd (UPCL) has received the first parcel of imported coal from Indonesia at the New Mangalore Port. ...
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- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- The University of Queensland
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Minerals Council of Australia
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Bhushan Steel Limited - India
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Sojitz Corporation - Japan
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- Central Java Power - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Merrill Lynch Commodities Europe
- Australian Commodity Traders Exchange
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Kalimantan Lumbung Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- Romanian Commodities Exchange
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Australian Coal Association
- Mintek Dendrill Indonesia
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
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