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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, 04 December 09
CHINA'S COAL IMPORTS PREDICTED TO DECLINE IN 2010
China's eye-catching coal import figure s are unlikely to extend into 2010 given the predicted narrow-down of the coal price spread between the hom ...
Friday, 04 December 09
SUBHASH PROJECTS BEGINS MINING AT INDONESIAN COAL BLOCK
Kolkata-based infrastructure company Subhash Projects and Marketing (SPML) has begun mining at its coal block in Indonesia and will begin despatchin ...
Friday, 04 December 09
DRY BULK MARKET IS ON THE RISE AGAIN
Proving rather resilient, compared to previous behaviors, the dry bulk market has been on a rebound mode once again, after a two-week fall, which su ...
Friday, 04 December 09
INDONESIA'S BUMI EYES MARKETING DEAL FOR BERAU COAL
Reuters reported that, Indonesian coal miner PT Bumi Resources Tbk said on Thursday it is in talks to be the exclusive marketing agent for coal prod ...
Friday, 04 December 09
KALIMANTAN GOLD AGREES TO SELL IBP COAL CONCESSION
COALspot.com ( Press Release): Kalimantan Gold Corporation Limited ("KLG" or the "Company"), which undertook drilling and had an ...
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- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- MS Steel International - UAE
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Aditya Birla Group - India
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Independent Power Producers Association of India
- Larsen & Toubro Limited - India
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Trasteel International SA, Italy
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- Jindal Steel & Power Ltd - India
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- PTC India Limited - India
- Iligan Light & Power Inc, Philippines
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
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