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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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Saturday, 02 May 09
COAL PRICES TO RISE ON CHINESE SUPPLY, INDIAN DEMAND, UBS SAYS
Peter Hickson, an analyst with UBS AG in London, comments on prices for thermal coal, burned to generate power. He commented in a report today.
& ...
Friday, 01 May 09
DEUTSCHE, BECKKETT CLAIMING ADARO WIN - THE JAKARTA GLOBE
Both Deutsche Bank AG and Beckkett, an investment firm controlled by Indonesian tycoon Sukanto Tanoto, claimed victory on Tuesday after Singapore&rs ...
Thursday, 30 April 09
SAN MIGUEL IN TALKS TO BUY STAKE IN ADARO - REUTERS
San Miguel Corp is in talks to buy a stake worth about $500 million in Adaro Energy , Indonesia's largest coal producer by market value, the Philip ...
Wednesday, 29 April 09
BAYAN READY TO OPERATE WORLD'S LARGEST COAL QUALITY IMPROVEMENT FACILITY - MAJALAH TAMBANG
PT. Bayan Resources Tbk. (hereinafter referred to as Bayan), an Indonesian coal manufacturer, announced that they are ready to operate the world's ...
Wednesday, 29 April 09
NEW GOV'T REGULATION SHOULD INCORPORATE CONFLICT SETTLEMENT BODY - ICMA (MAJALAH TAMBANG)
A draft government regulation on mineral and coal is currently in a process of completion. The Indonesian Coal Mining Association (ICMA) proposed th ...
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- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Electricity Authority, New Zealand
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- The University of Queensland
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- VISA Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- PTC India Limited - India
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Medco Energi Mining Internasional
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