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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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Wednesday, 29 August 12
COLOMBIA'S MINING BOOM: PART ONE - JOSEPH KIRSCHKE
COALspot.com - Colombia stands before one of the potentially largest, most diversified mining booms in the world. Untold reserves of gold, coal, cop ...
Wednesday, 29 August 12
SECOND HAND VESSELS IN HIGH DEMAND DESPITE SUMMER SEASON - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Despite the slow summer season, ship owners appear to be rather keen in acquiring some modern second hand tonnage at "knock-down" prices. ...
Monday, 27 August 12
BUMI BOOKS $322.1 MILLION NET LOSS IN 1H 2012 IN SPITE OF 8.6 PERCENT INCREASE IN SALES REVENUE
PT Bumi Resources Tbk, the single largest coal producer and exporter in Indonesia announces its first half financial report for the ...
Monday, 27 August 12
OVER 200 FOREIGN COMPANIES AND ENERGY MAJORS EXPECTED AT 2ND MOGP SUMMIT IN YANGON
Singapore based CMT and Machinery & Solutions Co. Ltd (M&S) announce that the 2nd MOGP Summit will be held on 3-6 September at the Sedona ho ...
Sunday, 26 August 12
SOUTH AFRICAN COAL OVERVIEW
South Africa's indigenous energy resource base is dominated by coal.
Internationally, coal is the most widely used primary fuel, accounting for ...
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- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- MS Steel International - UAE
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- New Zealand Coal & Carbon
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Baramulti Group, Indonesia
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- White Energy Company Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Trasteel International SA, Italy
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Carbofer General Trading SA - India
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Jorong Barutama Greston.PT - Indonesia
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Barasentosa Lestari - Indonesia
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- The University of Queensland
- Orica Mining Services - Indonesia
- Kobexindo Tractors - Indoneisa
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