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