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