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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, 02 August 10
LINC, ADANI COMPLETE THEIR COAL CONNECTION
"THE much-speculated deal between underground coal gasification company Linc Energy and India's Adani Enterprises is set to be signed tomorrow ...
Saturday, 31 July 10
TABONEO ANCHORAGE TO LOAD 1.5 MLN TON OR MORE COAL IN H1 AUGUST
COALspot.com: Eighty five ocean going vessels and barges have been nominated by coal buyers to their respective suppliers in Indonesia to load about ...
Saturday, 31 July 10
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The BDI was up by 7.72 pct last week wh ...
Friday, 30 July 10
DRY BULK MARKET BACK ON THE ROAD TO RECOVERY
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Thursday, 29 July 10
GOVT TOO OPTIMISTIC ON IRON, COAL PRICE
Federal government forecasts of continued strength in iron ore and coal prices, which underpin revenue expectations for the proposed new mining tax, ...
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- PetroVietnam Power Coal Import and Supply Company
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Interocean Group of Companies - India
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Thai Mozambique Logistica
- White Energy Company Limited
- Chamber of Mines of South Africa
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Bhushan Steel Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- The University of Queensland
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Metalloyd Limited - United Kingdom
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Eastern Energy - Thailand
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Banpu Public Company Limited - Thailand
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
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