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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, 04 February 10
NO AMDAL, NO COAL MINING IN KALIMANTAN: MINISTRY
To prevent further environmental damage, the government has said it would revoke the licenses of mining firms operating in Kalimantan that do not ha ...
Thursday, 04 February 10
ANTICIPATING DOMESTIC COAL DEMAND
Indonesia has an abundant amount of coal reserves, which in 2008 is estimated at 7,12 billion tones. Coal production in 2008 reached 231,18 mi ...
Wednesday, 03 February 10
CHINA'S MAIN COAL PRICES FALL AS WINTER DEMAND EASES
Weekly coal prices at China's Qinhuangdao port, a benchmark in the world's biggest producer and consumer of the fuel, fell for the first time in s ...
Wednesday, 03 February 10
NEWCASTLE COAL EXPORTS RISE 3%; SHIP QUEUE SHORTENS
Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel, increased 3 percent last week while the ...
Wednesday, 03 February 10
INDONESIA BUKIT ASAM SEES DOUBLE DIGIT 2010 REV GROWTH
* 2009 net profit rose an estimated 50 pct
* Sees opportunities for overseas acquisitions
Indonesian state-owned coal miner Bukit Asam saw 2009 ...
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- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indo Tambangraya Megah - Indonesia
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Price Waterhouse Coopers - Russia
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Orica Australia Pty. Ltd.
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- Simpson Spence & Young - Indonesia
- Larsen & Toubro Limited - India
- Coastal Gujarat Power Limited - India
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Bhatia International Limited - India
- Central Electricity Authority - India
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Baramulti Group, Indonesia
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Rio Tinto Coal - Australia
- Edison Trading Spa - Italy
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- Aboitiz Power Corporation - Philippines
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- MS Steel International - UAE
- White Energy Company Limited
- Minerals Council of Australia
- London Commodity Brokers - England
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Parliament of New Zealand
- Dalmia Cement Bharat India
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
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