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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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Tuesday, 11 August 09
ZAMBIAN COAL BUYERS CONTINUE IMPORTING COAL FROM ZIMBABWE
Lusaka Times reported that, Coal mining companies have bemoaned the lack of market for their produce as prospective buyers continue importing the co ...
Monday, 10 August 09
NOMINAL HIKE IN COAL PRICES SOON - MEDIA
The hindu business reported that, a marginal hike in coal prices is in the offing. "I will be soon approaching the Prime Minister on the matter ...
Monday, 10 August 09
MANGALAM CEMENT PLACES ORDER FOR CAPTIVE POWER PLANT
Steel Guru reported that, Mangalam Cement Ltd has announced that the company on August 6th 2009 finalized order for Captive Thermal Power Plant of 1 ...
Monday, 10 August 09
VIET NAM COAL EXPORTS HIT 13.5 MILLION TONNES
VietNamNet Bridge reported that, Viet Nam exported more than 13.5 million tonnes of coal in the first seven months of this year, equal to the same p ...
Monday, 10 August 09
S.KOREA KOSPO ISSUES SPOT, TERM COAL TENDERS
Korea Southern Power Co Ltd (KOSPO) is seeking 1.5 million tonnes of steam coal per year for delivery from October 2009 through September 2012 via a ...
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- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- Siam City Cement PLC, Thailand
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Minerals Council of Australia
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- Interocean Group of Companies - India
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- White Energy Company Limited
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Central Electricity Authority - India
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- Toyota Tsusho Corporation, Japan
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- Australian Coal Association
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
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