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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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Monday, 08 June 09
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Economic Times of India reported that, The government may allow commercial coal mining by private companies as it looks to plug the demand-supply ga ...
Monday, 08 June 09
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Sunday, 07 June 09
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Business Mirror reported that coal producer Semirara Mining Corporation has successfully entered the Thailand market during the Q1 of the year, help ...
Saturday, 06 June 09
IS THE RECESSION OVER ? - CAPT. REDDY, VISTAAR SHIPPING
COALspot.com (Singapore): Is the recession over, that is what most analysts think and seems so from the Baltic Index rally and firm commodity ...
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- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- San Jose City I Power Corp, Philippines
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- MS Steel International - UAE
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- Economic Council, Georgia
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Iligan Light & Power Inc, Philippines
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- White Energy Company Limited
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- Salva Resources Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- Agrawal Coal Company - India
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Deloitte Consulting - India
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Wilmar Investment Holdings
- Leighton Contractors Pty Ltd - Australia
- Heidelberg Cement - Germany
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- India Bulls Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- PTC India Limited - India
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