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