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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, 22 April 10
INDONESIAN COAL PRICE REFERENCE FOR MARCH 2010 - US$ 86.64/T
COALspot.com: The directorate general of mineral, coal and geothermal of Indonesia has begun publishing a monthly coal price reference (HBA) to be use ...
Thursday, 22 April 10
NEED TO IMPORT 82 MT COAL IN FISCAL - INDIA COAL MIN
Indian Express reported that, anxious to bridge the ever-widening gap between the rising demand for coal and its inadequate supply, the Coal Ministr ...
Thursday, 22 April 10
DRY CARGO DEMAND EXPECTED TO INCREASE, FAVORING HIGHER FREIGHT RATES
Increased dry bulk cargo demand is expected to become the norm in the coming weeks and months, according to analysts, which in turn should sustain f ...
Thursday, 22 April 10
INDIA'S BORL SEEKS TO BUY INDONESIAS LOW - SULFUR COAL
COALspot.com: Bharat Oman Refineries Ltd, a joint venture company (promoted by Bharat Petroleum Corporation Ltd, India and Oman Oil Company Lt ...
Wednesday, 21 April 10
INDONESIA SHIPPED 13.24 PERCENT MORE COAL IN MARCH THAN A MONTH EARLIER
COALspot.com: Indonesia, the world largest coal exporter, shipped 27,615,191 MT of coal in March 2010, compare to 24.38 million tons in January and ...
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- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- Australian Coal Association
- Planning Commission, India
- CNBM International Corporation - China
- Rashtriya Ispat Nigam Limited - India
- Jindal Steel & Power Ltd - India
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- The University of Queensland
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Global Business Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- MS Steel International - UAE
- Thiess Contractors Indonesia
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ambuja Cements Ltd - India
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- PTC India Limited - India
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Standard Chartered Bank - UAE
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Holcim Trading Pte Ltd - Singapore
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Sinarmas Energy and Mining - Indonesia
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
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