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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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Friday, 07 August 09
COAL-PRICE FORECAST RAISED AT MERRILL ON CHINA, INDIA DEMAND
Bloomberg reported that, Bank of America Corp.’s Merrill Lynch & Co. unit increased its price forecast for Asian power-station coal becaus ...
Friday, 07 August 09
CHINESE DEMAND FOR FOREIGN COAL SOARS
Mining Weekly reported that, Chinese coal imports rocketed by 126,3%, year-on-year, in the first half of this year, the country’s customs auth ...
Thursday, 06 August 09
RICHARDS BAY COAL SHIPMENTS FELL 3% ON YEAR IN JULY
Bloomberg reported that, Richards Bay Coal Terminal, Africa’s largest coal-export facility, exported 3 percent less of the fuel in July than i ...
Thursday, 06 August 09
NTPC LOOKS TO BYPASS STATE TRADING FIRMS ON COAL IMPORT
A reduced coal import bill for NTPC could lead to lower power tariffs
Live mint.com reported that, India’s largest power generation utility ...
Thursday, 06 August 09
CHINA JULY COAL IMPORTS AT 9.5 MLN T, DEMAND FIRM
* Coal imports at key ports in July 2.8 times year-ago levels
* July coal imports down nearly 40 percent from June
* China still buying overseas c ...
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- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- The Treasury - Australian Government
- Therma Luzon, Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- Heidelberg Cement - Germany
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Makarim & Taira - Indonesia
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Uttam Galva Steels Limited - India
- White Energy Company Limited
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Xindia Steels Limited - India
- Dalmia Cement Bharat India
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- New Zealand Coal & Carbon
- Australian Coal Association
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- Semirara Mining Corp, Philippines
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
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