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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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Thursday, 24 September 09
S.KOREA HYUNDAI STEEL TO BUY COAL FROM SIBERIA
Reuters reported that, South Korea's Hyundai Steel said on Wednesday it will buy a maximum of 300,000 tonnes of coal per year from Siberian Anthrac ...
Thursday, 24 September 09
NO IMPORTED COAL-BASED UMPPS: TATA POWER
Will wait until policy environment becomes more favourable.
Business Standard reported that, Tata Power Company (TPC), India’s largest priv ...
Thursday, 24 September 09
BUMI RAISES $1.9 BILLION SELLING DEBT TO CHINA'S CIC
Bloomberg reported that, PT Bumi Resources, Indonesia’s biggest coal producer, said it raised $1.9 billion selling debt to China’s sover ...
Thursday, 24 September 09
MACQUARIE DOWNGRADES U.S. COAL SECTOR TO NEUTRAL
Reuters reported that, Macquarie Research downgraded the U.S. coal sector to "neutral" from "overweight" as it believes that dem ...
Thursday, 24 September 09
CHINA WILL BE IMPORTER OF COKING COAL NEXT YEAR, MCCLOSKEY SAYS
Bloomberg reported that, China, the world’s largest coal user and producer, will remain an importer of the fuel through next year, according t ...
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- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- PTC India Limited - India
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Jaiprakash Power Ventures ltd
- Banpu Public Company Limited - Thailand
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- Sindya Power Generating Company Private Ltd
- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Planning Commission, India
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- IEA Clean Coal Centre - UK
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Ceylon Electricity Board - Sri Lanka
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Ministry of Finance - Indonesia
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
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