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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, 23 December 10
SOUTHGOBI RESOURCES CLOSES STRATEGIC INVESTMENT IN ASPIRE MINING LIMITED
Press Release – SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878), announced today that it has completed the private placement with Aspire Mining ...
Thursday, 23 December 10
CESC EYES COAL MINES IN INDONESIA, S AFRICA - TEHELKA
Company has already set a target of adding 6,000 MW power generation by the end of the 12th Plan in 2017
Tehelka reported that, CESC Ltd, the fla ...
Thursday, 23 December 10
SANTA CLAUSE DID NOT COME EARLY THIS YEAR - FEARNBULK
Handy
Not much fresh enquiry this week and quite dead in Bl.Sea/Med. Nevertheless ...
Thursday, 23 December 10
STERLITE ENERGY LIMITED TO BUY 0.6 MLN MT OF COAL FOR 2011
COALspot.com - Sterlite Energy Limited (SEL) is a part of Vedanta Resources plc , a London listed FTSE 100 diversified metals and mining major with ...
Wednesday, 22 December 10
PEABODY ENERGY TO SOURCE INDONESIAN COAL FROM PT SUPRA BARA ENERGI (SBE) - COAL GEOLOGY
Coal Geology reported that, Peabody Energy has entered into an agreement to source coal from PT Supra Bara Energi (SBE), which will be sold on the e ...
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- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- Gujarat Sidhee Cement - India
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- Petron Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- MS Steel International - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- Agrawal Coal Company - India
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Xindia Steels Limited - India
- Orica Mining Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- The University of Queensland
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Essar Steel Hazira Ltd - India
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