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