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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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- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- PTC India Limited - India
- Latin American Coal - Colombia
- Economic Council, Georgia
- Grasim Industreis Ltd - India
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Mjunction Services Limited - India
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Australian Coal Association
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- VISA Power Limited - India
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Larsen & Toubro Limited - India
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Mercator Lines Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Binh Thuan Hamico - Vietnam
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