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