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