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