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