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