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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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Tuesday, 02 June 09
GOVT FINALIZING DMO MECHANISM, REFERENCE PRICE FOR COAL - THE JAKARTA POST
Indonesia, the world's largest thermal coal exporter, is finalizing regulations on a reference price on coal, on a domestic market obligation (DMO) ...
Tuesday, 02 June 09
CHINA OVERSEAS COAL DEMAND TO STAY BUOYANT-MINERS (REUTERS)
China's demand for overseas coal is expected to stay strong in the second half as long as prices of imported coal maintain a discount to domestic p ...
Tuesday, 02 June 09
INDONESIA'S COAL EXPORTS REACH US$ 3.44 BILLION SO FAR THIS YEAR - TRADINGCHARTS
Indonesia`s coal exports in the January-April 2009 period increased by 21.31 per cent to US$3.44 billion compared to US$2.83 billion in the same per ...
Tuesday, 02 June 09
INDONESIA'S BUKIT ASAM AGREES HIGHER COAL PRICES - REUTERS
Indonesian state coal miner PT Bukit Asam Tbk said it has agreed coal prices for two power plants owned by state electricity firm PT Perusahaan List ...
Tuesday, 02 June 09
ADARO MAY RAISE COAL SALES TO CHINA, INDIA PLANTS - THE JAKARTA GLOBE
PT Adaro Energy, the country’s second-largest coal producer, may increase sales of power-plant coal to China and India on signs of a global ec ...
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- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Kohat Cement Company Ltd. - Pakistan
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- LBH Netherlands Bv - Netherlands
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Malabar Cements Ltd - India
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- Independent Power Producers Association of India
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Iligan Light & Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Carbofer General Trading SA - India
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Bhatia International Limited - India
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- The University of Queensland
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- Marubeni Corporation - India
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Intertek Mineral Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Mintek Dendrill Indonesia
- Vedanta Resources Plc - India
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Economic Council, Georgia
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- Ministry of Mines - Canada
- VISA Power Limited - India
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Cement Manufacturers Association - India
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