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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, 20 September 10
MMTC SEEKS TO BUY 1.3 MT OF COAL FOR INDIA UTILITIES - SXCOAL
MMTC Ltd., India’s largest state- owned trading company, is seeking bids for the supply of 1.3 million tonnes of coal to feed power plants run ...
Monday, 20 September 10
KANGAROO RESOURCES SIGNS PARTNERSHIP WITH ASEAMCO FOR INDONESIAN COAL ASSETS - PROACTIVE INVESTORS
International coal producer Kangaroo Resources (ASX: KRL) has completed a new three-year agreement with Australian mining consultants ASEAMCO to del ...
Monday, 20 September 10
ICVL LOOKS FOR COAL ASSETS IN UZBEK, INDONESIA, AUSTRALIA - ECONOMIC TIMES
Economic Times reported that, International Coal Ventures, or ICVL, the special purpose vehicle floated by five state-owned firms to scout for coal ...
Monday, 20 September 10
IRON-ORE SHIPPING DEMAND MAY GAIN ONCE CHINA STEEL CUTS FINISH, SSY SAYS
Demand to transport iron ore may rebound once China ends steel-production cuts and steel prices may gain in the next several months because of the r ...
Saturday, 18 September 10
ECI / CHINA FREIGHT ROUTE DOWN BY 1.22 PCT OR US$ 225 PER DAY AND CLOSED AT US$ 18,123 PER DAY - VISTAAR
COALspot.com: The BDI was under pressure this week and was almost down by 11 pct and closed at 2676 points.
The Cape and Panamax index was almost ...
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- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
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- Indian Oil Corporation Limited
- Economic Council, Georgia
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- OPG Power Generation Pvt Ltd - India
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- Gujarat Sidhee Cement - India
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- IEA Clean Coal Centre - UK
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- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
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- Edison Trading Spa - Italy
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- Bayan Resources Tbk. - Indonesia
- Merrill Lynch Commodities Europe
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- Jaiprakash Power Ventures ltd
- Ministry of Finance - Indonesia
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- Bhatia International Limited - India
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- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
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- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
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- Maharashtra Electricity Regulatory Commission - India
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- Energy Link Ltd, New Zealand
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- Indo Tambangraya Megah - Indonesia
- Attock Cement Pakistan Limited
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- CNBM International Corporation - China
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Sical Logistics Limited - India
- The Treasury - Australian Government
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
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- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- San Jose City I Power Corp, Philippines
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- White Energy Company Limited
- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- Australian Coal Association
- Romanian Commodities Exchange
- PTC India Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
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- Mintek Dendrill Indonesia
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- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Agrawal Coal Company - India
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- GVK Power & Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
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