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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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Monday, 24 August 09
10 LAKH (1 MILLION) TONNE COAL BURNT IN KPT
Times of India reported that, In an unusual phenomenon, 10 lakh tonne coal cache stored at a plot in Kandla Port Trust was reduced to ashes after it ...
Monday, 24 August 09
LANCO IN TALKS FOR INDONESIAN COAL MINE
Economic Times of India reported that, Infrastructure company Lanco Infratech is in advanced talks with Indonesian engineering, procurement and cons ...
Saturday, 22 August 09
'THE BDI IS LIKELY TO BE HOLDING AROUND 2,500 POINTS' - SHIPPING UPDATE
COALspot.com (Singapore): The dry bulk market continued to be soft and the BDI dropped by 10 percent this week and closed at 24,68 points this week. ...
Saturday, 22 August 09
INDIAN COAL BUYERS RE-EMERGE WITH FRESH TENDERS
Reuters world's largest international multimedia news agency reported that,Indian coal end-users have re-emerged after a few weeks with several fre ...
Friday, 21 August 09
HUANENG YIMIN TO HIKE COAL OUTPUT
China Daily, the largest English portal in China reported that, China's first large coal-electricity joint project, Huaneng Yimin Coal Electricity ...
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- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Intertek Mineral Services - Indonesia
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- Malabar Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- GMR Energy Limited - India
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Australian Coal Association
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indian Energy Exchange, India
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Singapore Mercantile Exchange
- India Bulls Power Limited - India
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Semirara Mining and Power Corporation, Philippines
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Global Green Power PLC Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Vizag Seaport Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Interocean Group of Companies - India
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- Posco Energy - South Korea
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Ministry of Transport, Egypt
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Eastern Energy - Thailand
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
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