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