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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, 28 January 10
COAL - VIETNAM / TRADE
Vietnam expects to turn into a coal importer within three years, spurred by an industrial boom and rising power consumption, a senior executive with ...
Thursday, 28 January 10
JAPAN STEELMAKERS OPPOSE QUARTERLY COAL CONTRACTS
Japanese steelmakers oppose miner BHP Billiton's attempt to switch to quarterly contracts from annual deals for supplying coal, as the change would ...
Thursday, 28 January 10
BHP MAY SELL 25% STAKE IN INDONESIAN COAL PROJECT
BHP Billiton Ltd. plans to sell only a 25 percent stake in a coal project in Indonesia as it wants to retain control of the asset, said Indra Dianna ...
Thursday, 28 January 10
TRANSNET ASPIRES TO 81MT/Y COAL EXPORT CAPACITY
South African State-owned rail transport enterprise Transnet wants to increase coal-line rail capacity to 81-million tons a year as part of its Quan ...
Wednesday, 27 January 10
ASIA'S 2010 STEAM COAL IMPORTS TO REACH 460 MLN T
* China to import up to 100 mln T of steam coal in 2010
* China, India seen investing in southern Africa assets
Asian imports of steam coal will ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
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- Petron Corporation, Philippines
- The University of Queensland
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
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- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
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- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- The Treasury - Australian Government
- White Energy Company Limited
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
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- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- Videocon Industries ltd - India
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- MS Steel International - UAE
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Salva Resources Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Australian Commodity Traders Exchange
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- GMR Energy Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
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