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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, 09 September 09
CHINESE INTEREST IN AUSTRALIA COAL TICKS UP AS PRICES FALL
After a lull of about two months, Australian thermal coal producers are now seeing renewed interest from Chinese buyers for spot cargoes in the four ...
Wednesday, 09 September 09
SALES FORECAST UP ON BETTER DISTRIBUTION
The Jakarta Post reported that, State coal producer PT Tambang Batubara Bukit Asam (PT BA) expects coal sales to rise by 11 percent next year as it ...
Wednesday, 09 September 09
NTPC HIRES MACQUARIE TO ADVISE INDONESIA COAL MINE PURCHASE
Bloomberg reported that, NTPC Ltd., Asia’s biggest power utility by value, has hired Macquarie Group Ltd. to evaluate a proposed coal mine pur ...
Tuesday, 08 September 09
SOUTH AFRICAN COAL FALLS MOST IN 11 WEEKS ON EXCESSIVE PRICES
Bloomberg reported that, Prices for coal shipped from South Africa’s Richards Bay, site of the world’s largest export terminal for the f ...
Tuesday, 08 September 09
INDIA MAY HAVE A JOINT WORKING GROUP FOR COAL WITH INDONESIA: SRIPRAKASH JAISWAL - PRESS RELEASE
Press Information Bureau of India reported in its web site that, The Coal Ministry has, in principle, agreed to set up a Joint Working Group for coa ...
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- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- ICICI Bank Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Jorong Barutama Greston.PT - Indonesia
- ASAPP Information Group - India
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Merrill Lynch Commodities Europe
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- Port Waratah Coal Services - Australia
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- Iligan Light & Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Global Business Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- Vizag Seaport Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- Planning Commission, India
- Economic Council, Georgia
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
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