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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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Tuesday, 17 August 10
HANDIES AND SUPRAS WOKE UP AGAIN AFTER SEVERAL WEEKS OF LETHARGY - BRS
A spectacular increase in Cape size rates pushed the BDI up more than 20% this week, with demand for prompt tonnage in the Pacific causing a major s ...
Monday, 16 August 10
INDIA'S TNPL TO SUPPORT TNEB WITH COAL SUPPLIES
COALspot.com: TNPL to award 300,000 MT of coal supply contract to Nehel General Trading of India. Tamil Nadu state undertaking , Tamil N ...
Monday, 16 August 10
INDONESIA'S PLN SECURED COAL SUPPLIES, LESS IMPACT BY RAINS
COALspot.com: Indonesian State Electricity Company, PT Perusahaan Listrik Negara (PLN), has secured coal supplies for all of its power plants except ...
Sunday, 15 August 10
THE FREIGHT MARKET IS EXPECTED TO REMAIN FIRM - CAPT REDDY
COALspot.com: The BDI rose by almost 22 pct despite peak holiday season which is usually quite market , where as the BCI up sharply by 46 pct which ...
Saturday, 14 August 10
INDONESIAN THERMAL COAL PRICES EXPECTED TO MOVE UP IN SEPTEMBER 2010 - CHAIRMAN ICMA
COALspot.com: Indonesian Coal Mining Association is expecting, the Indonesian and international coal prices will increase, and will be reached ...
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- Agrawal Coal Company - India
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
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- South Luzon Thermal Energy Corporation
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Parliament of New Zealand
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- IEA Clean Coal Centre - UK
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Sakthi Sugars Limited - India
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Australian Coal Association
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Sree Jayajothi Cements Limited - India
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Electricity Authority, New Zealand
- Price Waterhouse Coopers - Russia
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Karaikal Port Pvt Ltd - India
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
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