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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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Wednesday, 17 February 10
JORONG COULD COST BANPU 5%
Banpu Plc, Asean's biggest coal miner, forecasts a 5% drop in revenue if its suspended coal mine in Indonesia is closed for one year, says presiden ...
Wednesday, 17 February 10
RUSSIA KRU JAN COAL EXPORTS DOWN 4 PCT
Kuzbassrazrezugol, Russia's second largest steam coal producer, exported 1.859 million tonnes of coal last month, down 80,000 tonnes or 4 percent f ...
Wednesday, 17 February 10
VEDANTA SET FOR PORTS ENTRY WITH VIZAG TENDER
Vedanta, along with Leighton Contractors India, quoted a revenue share of 38.1% to win the 30-year contract
Mining and metals conglomerate Vedant ...
Tuesday, 16 February 10
TRENDS DRY BULK MARKET ... TRENDS - BRS
The start of the Chinese New Year had an immediate impact on rates and for once all the dry bulk segments lost similar ground.
The BDI fell 5%, a ...
Tuesday, 16 February 10
LAW POSES THREAT TO INDONESIA'S COAL INDUSTRY
A zoning law could cost coal miners billions of dollars this year alone, hurt investment in the industry and disrupt the supply of the fuel to the c ...
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- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- CIMB Investment Bank - Malaysia
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Ceylon Electricity Board - Sri Lanka
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Sojitz Corporation - Japan
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Bhushan Steel Limited - India
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- Goldman Sachs - Singapore
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Vizag Seaport Private Limited - India
- GMR Energy Limited - India
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Eastern Coal Council - USA
- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
- San Jose City I Power Corp, Philippines
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Coastal Gujarat Power Limited - India
- Simpson Spence & Young - Indonesia
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