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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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Thursday, 18 June 09
INDIKA GETS APPROVAL ON PETROSEA ACQUISITION
PT Indika Energy, the country’s third-biggest miner, said on Wednesday that its shareholders had approved its plan to acquire an 81.95 percent ...
Thursday, 18 June 09
MORE FUNDS FOR COAL VIDESH ASSET BUY
The government plans to let Coal Videsh, a subsidiary of Coal India, have more than Rs 1,000 crore at its disposal to shop for assets abroad.
&ld ...
Wednesday, 17 June 09
MINE EXPLOSION'S DEATH TOLL HITS 30 - (UPDATE 1 )
Search and rescue workers have discovered the bodies of 30 miners who were killed in a coal mine explosion in the West Sumatra regency of Sawahlunto ...
Wednesday, 17 June 09
S.KOREA UTILITIES INK '09 COAL CONTRACTS WITH CHINA
* S.Korea to buy 3 mln tonnes of coal from China at $78.50/T
* Talks between individual power firms and miners ongoing
South Korean utilities ...
Wednesday, 17 June 09
MINE BLAST KILLS NINE, BURIES DOZENS
A major mine explosion near Sawahlunto city, West Sumatra, Tuesday, killed at least nine people while more than 30 were buried and are feared ...
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- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Kaltim Prima Coal - Indonesia
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Agrawal Coal Company - India
- Central Electricity Authority - India
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Central Java Power - Indonesia
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Manunggal Multi Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- PTC India Limited - India
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Planning Commission, India
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
- Bangladesh Power Developement Board
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- GMR Energy Limited - India
- The University of Queensland
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- Sical Logistics Limited - India
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
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