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