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