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