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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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Thursday, 30 July 09
PNOC FORGES JOINT VENTURES AS STEPS UP COAL OPERATIONS
The Philippine National Oil Co.-Exploration Corp. has entered joint venture agreements with food and beverage conglomerate San Miguel and Filipinas ...
Thursday, 30 July 09
NAMANE OF SOUTH AFRICA IN SUDAN COAL DEAL, BUSINESS REPORT SAYS
Namane of South Africa in Sudan Coal Deal, Business Report Says
Namane Resources Ltd. of South Africa signed a coal-supply agreement with the Nat ...
Wednesday, 29 July 09
RP COAL DEMAND TO SURGE BY 2014 - PHILIPPINES UPDATE
CEBU, Philippines - With the entry of new coal-fired power generation plants in the Philippines, the Department of Energy (DOE) projected an increas ...
Wednesday, 29 July 09
INDIA HUNGRY FOR OUR COKING COAL ASSETS
The Australian reported that, INDIA is about to embark on a program of rapid coal sector acquisitions in Australia as it looks to plug a huge annual ...
Tuesday, 28 July 09
SHENZHEN ENERGY INKS COAL PURCHASE CONTRACT WITH CHINA SHENHUA
China Knowledge reported that, Shenzhen Energy Group Co Ltd has signed a five-year contract with China Shenhua Energy Co Ltd, which is engaged in th ...
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- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- PTC India Limited - India
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Cement Manufacturers Association - India
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Planning Commission, India
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Grasim Industreis Ltd - India
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- Thiess Contractors Indonesia
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Energy Link Ltd, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- South Luzon Thermal Energy Corporation
- International Coal Ventures Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- The University of Queensland
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Aditya Birla Group - India
- Wilmar Investment Holdings
- Kapuas Tunggal Persada - Indonesia
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