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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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Thursday, 26 April 12
BUKIT ASAMS 1Q OPERATING PROFIT MARGIN HAS INCREASED BY 6% TO RP. 1 TRILLION
COALspot.com - PT. Bukit Asam (Persero), the Indonesia’s state owned coal miner's 1Q, 2012 revenue has increased by 31% to Rp. 3.02 trillion ...
Thursday, 26 April 12
TAIPOWER TO BUY 1.15 MILLION TONS OF 5000 GAR COAL
COALspot.com - Taiwan Power Company intends to procure 1.125million tons of sub-bituminous coal for Taipower thermal power plant through open tender ...
Thursday, 26 April 12
TAIPOWER TO BUY 375,000 MT OF 4800 GAR COAL
COALspot.com - Taiwan Power Company intends to procure 375,000 metric tons of low sulfur sub-bituminous coal for Taipower thermal power plant ...
Thursday, 26 April 12
ADK SHIPPED 28,000 TONNES OF COAL THIS MONTH
COALspot.com - Orpheus Energy (ASX:OEG) has announced that four coal barges carrying a total of approximately 28,000 tonnes of ADK (Alam Duta K ...
Thursday, 26 April 12
DRY BULK CARRIERS RENTER FLEET AFTER IDLING, ON MARKETS RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market seems to be back on track, not only solidifying the gains of the past couple of weeks, but also racing to new heights, recuperra ...
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- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- GMR Energy Limited - India
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Essar Steel Hazira Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- Toyota Tsusho Corporation, Japan
- Energy Link Ltd, New Zealand
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Africa Commodities Group - South Africa
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Economic Council, Georgia
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
- PTC India Limited - India
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Business Power Corporation, Philippines
- Minerals Council of Australia
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- The University of Queensland
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Electricity Authority, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Sindya Power Generating Company Private Ltd
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Semirara Mining Corp, Philippines
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- ICICI Bank Limited - India
- Ministry of Mines - Canada
- Sree Jayajothi Cements Limited - India
- Deloitte Consulting - India
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- SN Aboitiz Power Inc, Philippines
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