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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, 25 November 09
NAPOCOR SCRAPS AWARD OF 715,000 TONS COAL
Top Philippine electricity producer National Power Corp. (Napocor) said on Wednesday it had cancelled plans to award 715,000 tons in coal supply con ...
Wednesday, 25 November 09
RISING FREIGHT RATES HIT COAL IMPORTERS
While state-owned NTPC’s 12.5 million tonne coal import order may have been aimed at plugging the shortage of coal at its thermal power plants ...
Wednesday, 25 November 09
CSN TO BUY RIVERSDALE STAKE TO BOOST COAL SUPPLIES
Cia. Siderurgica Nacional SA plans to buy 16.3 percent of Australian coal-exploration company Riversdale Mining Ltd. for about A$190.5 million ($175 ...
Tuesday, 24 November 09
ICRA DOWNGRADES TNPL`S RATING TO LAA
Credit rating agency, ICRA has revised the long term rating for the Rs 11.25 billion long-term fund-based bank facilities and Rs 1.5 billion non-con ...
Monday, 23 November 09
INDONESIA MINING RULE THREATENS INVESTMENT DRIVE
A new Indonesian mining rule, limiting contract work that can be outsourced and favouring local players, is shaping up as a new blow to plans ...
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- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- Australian Coal Association
- Planning Commission, India
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- Uttam Galva Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- Latin American Coal - Colombia
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- Independent Power Producers Association of India
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- Renaissance Capital - South Africa
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- White Energy Company Limited
- Bhushan Steel Limited - India
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- The University of Queensland
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
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