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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, 27 June 09
HEAVY CONGESTION AT AUSTRALIAN PORTS REACHING ALL TIME HIGH TO 120 SHIPS IN EAST COAST AUSTRALIA - VISTAAR SHIPPING
COALspot.com (Singapore): The market this week was a bit soft and the BDI was down by almost 10 pct and closed at 3,703 points.
The drop in BDI i ...
Friday, 26 June 09
INDONESIA INVESTORS EYE BHP BILLITON COAL PROJECT
About four Indonesian investors are interested in taking over a coal project owned by BHP Billiton Ltd, a senior government mining official said.
...
Friday, 26 June 09
SOUTH AFRICA'S CONSULTING GROUP OPENS OFFICES IN CHINA, INDONESIA
Consulting engineering company SRK Consulting has opened new offices in Asia to cope with the growing demand for its services in the region.
The ...
Friday, 26 June 09
RUSSIA MECHEL TO DELIVER 2 MLN T COKING COAL TO ASIA
Russian steel and coal producer Mechel said on Thursday it had signed contracts to deliver about 2 million tonnes of coking coal concentrate to unna ...
Friday, 26 June 09
SA COAL EXPORTS UNLIKELY TO BREACH 65MT THIS YEAR
Coal volumes railed to South Africa’s Richards Bay Coal Terminal (RBCT) during the rain-affected first quarter of 2009 had fallen well short o ...
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- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Attock Cement Pakistan Limited
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- PTC India Limited - India
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- GMR Energy Limited - India
- Bukit Makmur.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- New Zealand Coal & Carbon
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Indian Energy Exchange, India
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Grasim Industreis Ltd - India
- Xindia Steels Limited - India
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- White Energy Company Limited
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Tamil Nadu electricity Board
- MS Steel International - UAE
- Indika Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
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