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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, 30 September 09
COKING COAL PRICES MAY TOUCH $200/TN IN 2010-11
Business Standard reported that, Driven by surge in imports of coking coal by China, growth in Japanese steel output and signs of recovery in the In ...
Wednesday, 30 September 09
PURNOMO BIDS 'GOODBYE' TO ENERGY MINISTRY
The Jakarta globe reported that, In what could be construed as a resignation speech from a government official — but perhaps wasn’t &mda ...
Tuesday, 29 September 09
MINING AND ENERGY DAY 2009
The Minister of Energy and Mineral Resources, Purnomo Yusgiantoro led the ceremony marking 2009 Mining and Energy Day celebrations, held at the Depa ...
Tuesday, 29 September 09
BUKIT ASAM REDUCES ITS SALES TARGET
Tempo Interactive reported that, PT Tambang Batubara Bukit Asam Tbk has decided to reduce its sales target this year from 14.5 million tons of coal ...
Monday, 28 September 09
INDONESIA UNLIKELY TO PASS NEW MINING RULES IN 2009
Reuters reported that, Indonesia is unlikely to complete final regulations attached to a new mining and coal law this year, an official said on Mond ...
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- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Mintek Dendrill Indonesia
- Wood Mackenzie - Singapore
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Chettinad Cement Corporation Ltd - India
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- Star Paper Mills Limited - India
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Rio Tinto Coal - Australia
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- White Energy Company Limited
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Carbofer General Trading SA - India
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Sakthi Sugars Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- Ambuja Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
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