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