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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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Sunday, 08 March 09
AUSTRALIA'S FELIX STUDYING COAL ACQUISITIONS IN INDIA, INDONESIA
Bloomberg reported that, Felix Resources Ltd., an Australian supplier of coal to Korea and Japan, is studying acquisitions of energy coal assets in ...
Saturday, 07 March 09
THERMAL COAL PRICES MAY DROP, STANDARD CHARTERED SAYS
Bloomberg reported that, Coal prices may decline as a slump in demand for the fuel outpaces cuts in production, Standard Chartered Plc said.
Exp ...
Friday, 06 March 09
STRAITS ASIA EYES 3RD MINE
Straitstimes reported that, Mining company Straits Asia Resources is on an expansion trail to more than double its output by 2012.
Amid the econo ...
Friday, 06 March 09
INDONESIA MAY MISS 2009 COAL OUTPUT TARGET-OFFICIAL
Indonesia, the world's top thermal coal exporter, may fail to achieve its coal production target this year as the global economic crisis dents dema ...
Friday, 06 March 09
POWER FIRMS HEAD TO INDONESIA FOR COAL
The Hindu Businessline reported that, The enactment of a new, more liberal, mining legislation in Indonesia is drawing coal-starved Indian power uti ...
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- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- White Energy Company Limited
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Mjunction Services Limited - India
- The University of Queensland
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Wilmar Investment Holdings
- VISA Power Limited - India
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Toyota Tsusho Corporation, Japan
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