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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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Sunday, 05 September 10
HARUM ENERGY EYES 7.4 MILION TONS OF COAL OUTPUT IN 2010
Indonesia's coal miner PT Harum Energy Tbk, controlled by Indonesian tycoon Kiki Barki, is eyeing 7.4 million tons of coal production in 2010, a 27 ...
Sunday, 05 September 10
THE FREIGHT MARKET WAS BIT VOLATILE WITH NO CLEAR INDICATION OF THE MARKET - CAPT REDDY
COALsopot.com: The freight market was bit volatile with no clear indication of the market.
However the BDI continued the upward trend mainly due ...
Sunday, 05 September 10
NOROCHCHOLAI POWER PLANT TO BE COMMISSIONED ON JANUARY 1
Daily news reported that, the Norochcholai coal power plant will be commissioned on January 1, 2011 adding 300 megawatts to the national power grid ...
Friday, 03 September 10
BANPU CUTS INDONESIAN HOLDING BUT ITM REMAINS KEY STRATEGIC UNIT - BANGKOK POST
"SET-listed Banpu Plc, Asean's largest coal miner, yesterday announced the sale of an 8.72% stake in its listed coalmining holding company in ...
Friday, 03 September 10
NALCO, INDONESIAN FIRM DIFFER ON COAL SUPPLY TO SMELTER - DNA INDIA
A few days ago, National Aluminium Company (Nalco) advertised in Indonesian newspapers asking for companies to bid for coal supplies for its 500,000 ...
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- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Energy Link Ltd, New Zealand
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- GMR Energy Limited - India
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- Economic Council, Georgia
- Xindia Steels Limited - India
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Australian Coal Association
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Malabar Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Indian Energy Exchange, India
- Indo Tambangraya Megah - Indonesia
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Chamber of Mines of South Africa
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- Iligan Light & Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
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