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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, 02 August 11
INDONESIA BECOMES SECOND LARGEST COKING COAL EXPORTER
COALspot.com - Indonesia, the largest thermal coal exporter in the world now becomes second biggest coking coal exporter to Japan. Indonesian’ ...
Tuesday, 02 August 11
5TH ASIA PACIFIC COAL TRADING & INVESTMENT OUTLOOK TO PRESENT LATEST TRENDS
Press Release - Global commodities prices have been staying high since the beginning of 2011, resulting in the “TENSION” in various coun ...
Tuesday, 02 August 11
REALM RESOURCES TO ACQUIRE A 75% INTEREST IN THE KATINGAN RIA COAL PROJECT
COALspot.com - Scoping study at the Katingan Ria Coal Project, Central Kalimantan demonstrates positive technical and financial potential for the pr ...
Tuesday, 02 August 11
COAL INDIA TO INVEST IN GOLDEN ENERGY MINES
COALspot.com - Golden Energy Mines, part of PT Dian Swastatika Sentosa Tbk’s, is still negotiating with several strategic investors to o ...
Sunday, 31 July 11
CAPES ARE TRADING BELOW $ 9500 PER DAY - VISTAAR
COALspot.com - The BDI further softened by 4.46 pct and closed at 1264 points which touched below 1300 points after long time. The Cape and Panamax ...
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- TNB Fuel Sdn Bhd - Malaysia
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
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- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
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- Thai Mozambique Logistica
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- The University of Queensland
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- San Jose City I Power Corp, Philippines
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- Bulk Trading Sa - Switzerland
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- Cement Manufacturers Association - India
- MS Steel International - UAE
- Georgia Ports Authority, United States
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- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
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- Electricity Generating Authority of Thailand
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- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
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- Goldman Sachs - Singapore
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- SMC Global Power, Philippines
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- Wood Mackenzie - Singapore
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- Formosa Plastics Group - Taiwan
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- Renaissance Capital - South Africa
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
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- Jaiprakash Power Ventures ltd
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- PTC India Limited - India
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- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
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- Timah Investasi Mineral - Indoneisa
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- Power Finance Corporation Ltd., India
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- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Australian Coal Association
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Coastal Gujarat Power Limited - India
- White Energy Company Limited
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Star Paper Mills Limited - India
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- Meralco Power Generation, Philippines
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Planning Commission, India
- Heidelberg Cement - Germany
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