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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, 13 November 09
API4 IGNORES LOW COAL TRADES - SWISS SINGAPORE
* Jan, Feb S.Africa coal prices hit 12-month highs
* Indian trader says deals done dollars below index
Reuters reported that, the physical coal ...
Thursday, 12 November 09
INDONESIA'S BUMI COAL PRODUCTION TO INCREASE
The sale is predicted to jump 14 percent to 58 million tons.
Viva News reported that, PT Bumi Resources Tbk. (BUMI) projected that the company's ...
Thursday, 12 November 09
INDIA'S BHEL IS IN INDONESIA NOW WITH THE COST EFFECTIVE CFBC BASED BOILER TURBINE PACKAGES
COALspot.com(Indonesia): BHEL, the largest engineering and manufacturing enterprise in India in the energy-related / infrastructure sector, is now f ...
Thursday, 12 November 09
NTPC FARAKKA AND KAHALGAON UNITS SHUT DOWN ON COAL SHORTAGE
Operations at two units each of power major NTPC Ltd’s 1600 MW Farakka and the 2340 MW Kahalgaon stations have ground to a halt due to an acut ...
Thursday, 12 November 09
GANGAVARAM PORT SETS RECORD BY DISCHARGING 80,514 TONNE OF COAL CARGO
Gangavaram Port, the deepest port in the country with water depth of 20 meters, has achieved an unprecedented milestone by discharging 80,514 metric ...
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- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
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- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
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- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
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- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
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- Goldman Sachs - Singapore
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- Minerals Council of Australia
- CNBM International Corporation - China
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
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- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
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- Energy Link Ltd, New Zealand
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- Offshore Bulk Terminal Pte Ltd, Singapore
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- New Zealand Coal & Carbon
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- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Planning Commission, India
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- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- PTC India Limited - India
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- Dalmia Cement Bharat India
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
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- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Orica Mining Services - Indonesia
- Australian Commodity Traders Exchange
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- White Energy Company Limited
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- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
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- Therma Luzon, Inc, Philippines
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- Jorong Barutama Greston.PT - Indonesia
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- Australian Coal Association
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- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Electricity Generating Authority of Thailand
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
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- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
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