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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, 27 January 10
PEABODY ENERGY EYES 'RED HOT' ASIAN COAL DEMAND
US miner Peabody Energy has seen already-strong Asian markets become “red hot”, as demand for metallurgical and thermal coal strains sup ...
Wednesday, 27 January 10
KOLKOTTA BASED POWER UTILITY CESC LOOKING FOR 100,000 MT OF COAL FOR MAY & JUNE DELIVERY
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Tuesday, 26 January 10
FREIGHT COST ERODES INDIA CEMENTS NET
"Freight cost increased from an average of around 14% of sales in the previous quarters to around 20% in the third quarter"
The Decembe ...
Tuesday, 26 January 10
VITOL BUYS EXPORT SPACE AT COLOMBIA SANTA MARTA PORT
Global energy trader Vitol has signed a four-year deal to take export capacity at Colombia's 3 million tonnes a year Carbonsan port in Santa Marta, ...
Tuesday, 26 January 10
AUSTRALIAN FIRM TO MINE COAL IN WEST BENGAL
India Resources Ltd (IRL), a mining firm listed on the Australian Stock Exchange, has decided to enter into contract mining of coal in
India ...
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- White Energy Company Limited
- Wood Mackenzie - Singapore
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- Star Paper Mills Limited - India
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- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- Parliament of New Zealand
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- Sarangani Energy Corporation, Philippines
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- Essar Steel Hazira Ltd - India
- IEA Clean Coal Centre - UK
- Tamil Nadu electricity Board
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Posco Energy - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- ICICI Bank Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- PTC India Limited - India
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Miang Besar Coal Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- The University of Queensland
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Jindal Steel & Power Ltd - India
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining and Power Corporation, Philippines
- Aditya Birla Group - India
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indogreen Group - Indonesia
- Metalloyd Limited - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Merrill Lynch Commodities Europe
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