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