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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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Tuesday, 21 July 09
FIRST QUARTER COAL MARKET AND EURACOAL'S OUTLOOK FOR THE FUTURE
Euracoal reports that for the first time in many years, the world market for hard coal fell by some 8 % during the first quarter 2009. This latest E ...
Monday, 20 July 09
CHINAS COAL DEMAND, OUTPUT TO PICK UP IN H2 - GROUP 2
Financial24 reported that, China's coal demand is expected to gradually pick up in the second half of the year, and coal output will likely grow fa ...
Monday, 20 July 09
ADANI POWER LAUNCHES IPO, AIMS HIGHER CAPACITY
Economic Times reported that, Adani Power Ltd, a power project development company, promoted by Adani Enterprise went for an initial public offering ...
Monday, 20 July 09
BANPU'S SECOND-HALF PROFIT MAY DROP ON COAL PRICES
Bloomberg Reported that, Banpu Pcl, Thailand’s biggest coal producer, expects profit to decline in the second half from the first six months a ...
Monday, 20 July 09
CHINA COAL PRODUCES 52.7 MLN TONNES OF COAL IN 1H, UP 5.4 PCT
China Mining reported that, China Coal Energy Co., the country's second largest coal producer, said Saturday that it produced 52.67 million tonnes ...
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- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Maharashtra Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- The University of Queensland
- Aditya Birla Group - India
- Eastern Energy - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- London Commodity Brokers - England
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- Orica Mining Services - Indonesia
- Bulk Trading Sa - Switzerland
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Attock Cement Pakistan Limited
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Parliament of New Zealand
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Ind-Barath Power Infra Limited - India
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- Bharathi Cement Corporation - India
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Manunggal Multi Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- Planning Commission, India
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Kepco SPC Power Corporation, Philippines
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Kobexindo Tractors - Indoneisa
- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GMR Energy Limited - India
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
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