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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, 17 June 10
COAL EXPLORATION & DEVELOPMENTS HOTPOTS CONFERENCE
Press Release: The Coal Exploration and Developments Hotspots conference will bring together a panel of more than 20 of the world’s lead ...
Thursday, 17 June 10
AUSTRALIA'S LEIGHTON WINS $1.3 BILLION OF NEW WORK - THE JAKARTA POST
Australian construction and contract mining group Leighton Holdings Ltd. said Thursday it has won 1.5 billion Australian dollars ($1.3 billion) of n ...
Wednesday, 16 June 10
INDONESIAS STATE OWNED ELECTRICITY COMPANY WILL CONSUME 95.30 MILLION TONS OF COAL IN 2014
COALspot.com: Indonesia's state owned electricity company forecasted its coal requirement in 2014 would be around 95 million tons. ...
Wednesday, 16 June 10
MADHYA PRADESH GOVT IMPORT 50K METRIC TONNES OF COAL FROM INDONESIA - DNA INDIA
DNA India reported that, the Madhya Pradesh government has imported 50,000 metric tonnes of coal from Indonesia to deal with its shortage which is a ...
Tuesday, 15 June 10
INDONESIA'S COAL EXPORTS FELL TO 18.52 - MILLION TONS IN MAY
COALspot.com: Indonesia, the world largest coal exporter, shipped 18,529,695 of coal in May 2010. May coal exports dropped by 20.61 percent co ...
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- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Central Java Power - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Aditya Birla Group - India
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- Borneo Indobara - Indonesia
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Port Waratah Coal Services - Australia
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Barasentosa Lestari - Indonesia
- Standard Chartered Bank - UAE
- Sindya Power Generating Company Private Ltd
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
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