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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, 23 June 09
NAPOCOR TO RE-TENDER FOR 195,000 T COAL IN JULY
Electricity producer National Power Corp. (Napocor) will hold a tender on July 15 to buy 195,000 tons of steam coal for its Sual power station, the ...
Monday, 22 June 09
ONE DIES IN KUTAI COAL TUNNEL COLLAPSE
The Jakarta Post reported that, A tunnel at a coal mine belonging to company PT Fajar Bumi Sakti in Kutai Kartanegara, East Kalimantan collapsed on ...
Monday, 22 June 09
THIS WEEK IS EXPECTED TO BE FIRM AND DEMAND OF SHIPS WOULD BE STRONG - VISTAAR SINGAPORE
COALspot.com (Singapore): The BDI up by 487 points over last week which is an increase of almost 13 pct. The increase is again mainly due to Ca ...
Monday, 22 June 09
CHINESE MAY COAL IMPORTS HIT RECORD 9.43 MILLION TONNES
Reuters quoted Custom Data showed that China's coal imports hit an all-time record of 9.43 million tonnes in May.
The figure surpasses the previ ...
Monday, 22 June 09
SOUTH AFRICAN EXPORT COAL DECLINES ON WEAKENING EUROPEAN DEMAND
Prices for coal shipped from South Africa’s Richards Bay, site of the world’s largest export terminal for the fuel, posted the first dro ...
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- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- Uttam Galva Steels Limited - India
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- McConnell Dowell - Australia
- VISA Power Limited - India
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Commonwealth Bank - Australia
- Maharashtra Electricity Regulatory Commission - India
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Central Electricity Authority - India
- Central Java Power - Indonesia
- The University of Queensland
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Orica Mining Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- Indian Oil Corporation Limited
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Bukit Baiduri Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sree Jayajothi Cements Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
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