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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, 04 June 09
ASIA COAL - PRICES RISE TO 31/2 MTH HIGH ON OIL, ECONOMY - INTERACTIVE INVESTOR
Interactive Investor reported that, Prices of power-station coal from Australia, a benchmark for Asia, rose to a three-and-a-half-month high of over ...
Thursday, 04 June 09
PTT: RESTRUCTURING BUSINESS, DIVERSIFYING INTO COAL - EASYBOURSE
Thailand's largest energy conglomerate, PTT PCL (PTT.TH), will diversify into coal as part of its business restructuring, Senior Executive Vice Pre ...
Thursday, 04 June 09
ADARO SECURES THREE NEW CONTRACTS, SAYS OUTLOOK POSITIVE - THE JAKARTA POST
Publicly listed PT Adaro Energy, the country's second largest coal miner, announced Wednesday it had secured three new coal contracts from buyers f ...
Wednesday, 03 June 09
XSTRATA, KOMIPO AGREE SOME '09 COAL TONNAGE AT $63/T- REUTERS
South Korean utility Korea Midland Power Co (KOMIPO) has agreed to buy part of its 2009 term contract tonnage from Xstrata's coal unit at about $63 ...
Wednesday, 03 June 09
KOSEP SEEKS UP TO 3 MLN TONNES OF COAL - REUTERS
Korea South-East Power Co Ltd (KOSEP) has issued four tenders seeking a total of 3 million tonnes of coal for delivery between 2009 to 2011, a tende ...
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- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Borneo Indobara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- Eastern Coal Council - USA
- Ministry of Mines - Canada
- PTC India Limited - India
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- The University of Queensland
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Planning Commission, India
- Latin American Coal - Colombia
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- ASAPP Information Group - India
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
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