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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, 15 July 10
IRON ORE PRICING MECHANISMS PUT ON THE SPOT
THE new iron ore pricing mechanisms that killed off the annual benchmark system are coming under pressure. The spot price of the steel feed has fall ...
Thursday, 15 July 10
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SUCCESSFUL COMMISSIONING OF GTLE LOW RANK COAL UPGRADING PLANT
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Tuesday, 13 July 10
BUMI TO PRODUCE MORE THAN 67 MILLION TONS OF COAL IN 2010
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Tuesday, 13 July 10
FURTHER LOSSES FOR BALTIC DRY INDEX ON HIGH VESSEL SUPPLY
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- Tata Chemicals Ltd - India
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- The University of Queensland
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- Ministry of Mines - Canada
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Malabar Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Mining Services - Indonesia
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Tamil Nadu electricity Board
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Medco Energi Mining Internasional
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
- Interocean Group of Companies - India
- PTC India Limited - India
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Krishnapatnam Port Company Ltd. - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
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