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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, 29 April 10
KANGAROO RESOURCES INKS KEY COAL EXPORT CONTRACT WITH YUDEAN FARNON - PROACTIVE INVESTORS
Proactive Investors reprted that, Kangaroo Resources has secured an initial export sales contract for coal from the company’s operating coal p ...
Wednesday, 28 April 10
UNITED TRACTORS FOCUSES ON MINING AS IT SEEKS TO DIVERSIFY REVENUE SOURCES - JG
The Jakarta globe reported that, PT United Tractors, Indonesia’s biggest heavy-equipment distributor and mining contractor, aims to have its m ...
Wednesday, 28 April 10
DRY BULK MARKET
After a prolonged period of anticipation and a stalled dry bulk market in terms of freight rates, the industry’s benchmark, the Baltic Dry Ind ...
Tuesday, 27 April 10
CAPESIZES UP, PANAMAXES DOWN - BRS
It was Capesizes up, Panamaxes down this week as the latter experienced a correction after its recent gains. Period rates for Panamaxes remain firm ...
Tuesday, 27 April 10
S.KOREA EWP SEEKS 0.520 MILLION TONS OF SUB-BITUMINOUS COAL
COALspot.com: South Korea East West Power Company has called for term bids for supply of Sub-bituminous Coal for Dangjin Thermal Power Pla ...
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- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- Videocon Industries ltd - India
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Petron Corporation, Philippines
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Planning Commission, India
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Merrill Lynch Commodities Europe
- Latin American Coal - Colombia
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Jaiprakash Power Ventures ltd
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Bukit Makmur.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Indian Energy Exchange, India
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Sinarmas Energy and Mining - Indonesia
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Mercuria Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
- SN Aboitiz Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
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