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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, 28 April 09
S'PORE COURT RULES AGAINST DEUTSCHE ON ASSET SALE - REUTERS
Singapore's highest court has ruled that Deutsche Bank (DBKGn.DE) may have to pay unspecified damages to an investment firm as it did not get the b ...
Tuesday, 28 April 09
WORLD THERMAL COAL PRICE EXPECTED TO CRASH - PURCHASING.COM
Macquarie Bank sees 50% drop to $60/ton in 2009
Macquarie Bank today forecast the 2009 average market price for world thermal coal at $60/ton, a ...
Tuesday, 28 April 09
THAI LANNA TO OPEN NEW INDONESIAN MINE BY Q3 - REUTERS
Thailand's Lanna Resources PCL LANN.BK said on Monday it planned to open a new coal mine in Indonesia by the third quarter of 2009 with an initial ...
Tuesday, 28 April 09
SOUTH AFRICAN EXPORT COAL RETREATS ON WEAKER EUROPEAN DEMAND - BLOOMBERG
Prices for coal shipped from South Africa’s Richards Bay, site of the world’s largest export terminal for the fuel, fell for a second co ...
Monday, 27 April 09
INDONESIA S.KALIMANTAN GETS COAL TRUCKS OFF PUBLIC ROADS - REUTERS
A local government in one of Indonesia's top coal-producing areas has banned coal and palm oil firms from using public roads because of the damage ...
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- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- CNBM International Corporation - China
- Semirara Mining Corp, Philippines
- Australian Coal Association
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Miang Besar Coal Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- Mercuria Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- The University of Queensland
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- VISA Power Limited - India
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Maharashtra Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Indogreen Group - Indonesia
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- Ministry of Transport, Egypt
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
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