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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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Saturday, 04 July 09
S. AFRICA'S RICHARDS BAY TO CAP NEW COAL VOLUMES, MININGMX SAYS
South Africa’s Richards Bay Coal Terminal is proposing restrictions on the quotas it awards to coal exporters from the so-called Phase 5 expansi ...
Saturday, 04 July 09
DALRYMPLE BAY COAL TERMINAL EXPANSION COMPLETE
BABCOCK & Brown Infrastructure has completed expansion of the Dalrymple Bay Coal Terminal (DBCT) near Mackay, Queensland.
The terminal is now ...
Friday, 03 July 09
CHINA SHENHUA TO DOUBLE COAL CAPACITY BY 2014-PAPER
China Shenhua Energy Co Ltd plans to double its annual coal production capacity by 2014 from this year's level, the China Securities Journal report ...
Friday, 03 July 09
UKRAINE CUTS COAL PRODUCTION 9.3 PERCENT IN H1
Ukraine reduced coal production approximately 9.3%, or by 3.673 million tonnes, to 35.879 million tonnes in the first half of 2009 compared to the s ...
Thursday, 02 July 09
PETCOKE BOOMS AS CEMENT MAKERS TRY TO REPLACE COAL
* Cement makers led by Asia chase petcoke to replace coal
* Petcoke prices up $10/T Feb-Jun, set to rise further
* Domestic U.S. petcoke demand ma ...
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- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- Siam City Cement - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Australian Coal Association
- The University of Queensland
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Orica Mining Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parry Sugars Refinery, India
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- Bhushan Steel Limited - India
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
- ICICI Bank Limited - India
- Parliament of New Zealand
- Global Business Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Port Waratah Coal Services - Australia
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Alfred C Toepfer International GmbH - Germany
- Essar Steel Hazira Ltd - India
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- Orica Australia Pty. Ltd.
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
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