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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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Wednesday, 01 July 09
NEWCASTLE WEEKLY COAL EXPORTS RISE BY 12PCT
Bloomberg reported that Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel, gained 12% last ...
Wednesday, 01 July 09
RS 6,000CR MMTC COAL IMPORT PLAN UNDER CLOUD
The plan of MMTC Ltd, a trading firm under the commerce ministry, to import coal worth Rs 6,000 crore has come under cloud, with the Central ...
Wednesday, 01 July 09
INDONESIAN FIRM BIDS FOR 130,000T COAL FOR NAPOCOR
Top Philippine electricity producer National Power Corp. (Napocor) said on Wednesday it received two bids from Indonesia's PT Trubaindo and its loc ...
Wednesday, 01 July 09
COAL PRICE INDEX TO BE LAUNCHED IN JULY
India will soon get a coal index to track the coal price movement in the country.
India's leading e-commerce company Mjunction Services Ltd will ...
Wednesday, 01 July 09
COAL INDIA SEEKS FASTER APPROVALS, IMPORTS, OVERSEAS MINERS
Coal India Ltd., the world’s biggest coal producer, wants mining approvals sped up to help it boost production to meet a widening supply short ...
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- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Anglo American - United Kingdom
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Formosa Plastics Group - Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Mercuria Energy - Indonesia
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Timah Investasi Mineral - Indoneisa
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Independent Power Producers Association of India
- Gujarat Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- Bhushan Steel Limited - India
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- PTC India Limited - India
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Xindia Steels Limited - India
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Star Paper Mills Limited - India
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Parliament of New Zealand
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
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