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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, 29 March 11
DUTY EXEMPTION UNLIKELY TO IMPACT COKING COAL PRICES - PTI NEWS
Press Trust of India News reported that, the exemption to certain types of coking coal from customs duty is not likely to impact steel prices at pre ...
Monday, 28 March 11
HARUM ENERGY FY10 EARNING UP 7.23% - INSIDER STORIES
Thermal coal producer PT Harum Energy Tbk (HRUM), controlled by Indonesian businessman Kiki Barki through his son Lawrence Barki, posted a slight in ...
Monday, 28 March 11
IBT RAISES CAPACITY OF PULAU LAUT TERMINAL - THE JAKARTA POST
The Jakarta Post reported that, coal infrastructure and logistics firm PT Indonesia Bulk Terminal (IBT), a subsidiary of PT Adaro Energy Tbk, plans ...
Saturday, 26 March 11
THE FREIGHT MARKET REMAINED A BIT VOLATILE THIS WEEK - CAPT. REDDY
COALspot.com - "The freight market remained a bit volatile this week", says Capt. Reddy, director of Vistaar Shipping Singapore.
Howeve ...
Saturday, 26 March 11
FLSMIDTH WINS MULTIMILLION DOLLAR MATERIAL HANDLING PROJECT IN INDONESIA
FLSmidth has signed a contract in Jakarta worth in excess of USD 135m (DKK 700m) with PT Adaro Indonesia, a subsidiary of PT Adaro Energy Tbk., to s ...
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- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Timah Investasi Mineral - Indoneisa
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Bharathi Cement Corporation - India
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Standard Chartered Bank - UAE
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Chamber of Mines of South Africa
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Posco Energy - South Korea
- Australian Coal Association
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- London Commodity Brokers - England
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Global Coal Blending Company Limited - Australia
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- ICICI Bank Limited - India
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
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