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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, 05 January 11
BUKIT ASAM TARGETS 20% BUY TO GROW COAL TRANSPORT CAPACITY - THE JAKARTA GLOBE
The Jakarta Globe reported that, Indonesian coal producer Tambang Batubara Bukit Asam is considering buying an additional 20 percent stake in Bukit ...
Wednesday, 05 January 11
FLOODING IN AUSTRALIA WILL CAUSE COAL PRICES TO SPIKE AT LEAST 20 PERCENT
Rising coal prices are set to spike at least 20 per cent higher because of supply shortages due to severe flooding in Australia, adding cost pressur ...
Wednesday, 05 January 11
DRY BULK MARKET BEGINS NEW YEAR ON SOUR NOTE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Seasonal factors like the worst flooding in Australia’s Queensland in half a century, coupled with thin trade activity has put the dry bulk ma ...
Tuesday, 04 January 11
THE WCI-CHINA ROUTE WAS TRADED IN THE MID US$ 10,000S - BRS DRY BULK
As reported by BRS Dry Bulk, after a stronger than expected performance in 2010, rates finished on a sombre note in December with the BDI at1,773 po ...
Tuesday, 04 January 11
BALI, INDONESIA HOST OF WORLD RENEWABLE ENERGY AND ENERGY EFFICIENCY CONFERENCE
Press Release - Indonesian Renewable Energy Society (METI – IRES) has launched the plan for organizing the international gathering ...
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- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Mjunction Services Limited - India
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- Banpu Public Company Limited - Thailand
- The University of Queensland
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- CNBM International Corporation - China
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- LBH Netherlands Bv - Netherlands
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- Mercator Lines Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- Central Java Power - Indonesia
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Medco Energi Mining Internasional
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Baramulti Group, Indonesia
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- Australian Coal Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- India Bulls Power Limited - India
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Bangladesh Power Developement Board
- Planning Commission, India
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
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