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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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Monday, 27 December 10
RIO TINTO EYES AUSTRALIAN COAL MINER - RTE NEWS
Global resources giant Rio Tinto has made a $3.9 billion bid for Australian coal miner Riversdale.
RTE News reported that, Global resources giant ...
Sunday, 26 December 10
ANGLO SELLS AUSTRALIAN COAL ASSETS - BARCELONA NEWS
Barcelona News reported that, Anglo American has sold off undeveloped Australia coal assets for $577 million.
The global resources giant ha ...
Saturday, 25 December 10
FREIGHT MARKET - LOWEST FIXTURES REPORTED SINCE MID 2009 - CAPT. REDDY
COALspot.com - We wish you a Merry Christmas and a Happy New Year 2011.
The holiday season seems to have severely affected the fr ...
Friday, 24 December 10
CIL SHORTLISTS 21 FIRMS TO IMPORT 250 MT COAL - THE HINDU
The Hindu reported that, Coal India plans to import about 250 million tonnes (mt) over the next 10 years to meet the country's growing requirement. ...
Friday, 24 December 10
DRY BULK OWNERS COULD SOON RECONSIDER SCRAPPING OLDER VESSELS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the dry bulk market close to its lowest levels in months and indeed close to 2010 lows, ship owners could be heading towards scrapyards in a bi ...
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- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Global Coal Blending Company Limited - Australia
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Aditya Birla Group - India
- Marubeni Corporation - India
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- Central Java Power - Indonesia
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bukit Baiduri Energy - Indonesia
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Sakthi Sugars Limited - India
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Sical Logistics Limited - India
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- Wilmar Investment Holdings
- Australian Coal Association
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Intertek Mineral Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- ASAPP Information Group - India
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- The University of Queensland
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
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