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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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Friday, 15 January 10
ADARO INDONESIA STILL TOPS IN INDONESIAN COAL EXPORT RANKING
COALspot.com (Indonesia): PT. Adaro Indonesia, the world first Envirocoal producer and Indonesia's second largest thermal coal producer is top coal ...
Friday, 15 January 10
NTPC TO ADD 6,000 MW EACH YEAR IN 12TH PLAN
Will raise total generation capacity to 75,000 Mw by 2017, up from 30,644 Mw at present.
India's largest power generator NTPC, which will launch ...
Friday, 15 January 10
POSCO SAYS 2010 COKING COAL AGREEMENT MAY BE DELAYED - BLOOMBERG
Posco, South Korea’s biggest steelmaker, said an agreement on coking coal prices for this year may be delayed because major suppliers of the s ...
Friday, 15 January 10
CHINA POWER FIRMS SEEK COAL IMPORTS, SUPPLY SCARCE
China's coal-hungry power plants have turned to imported coal to cope with widespread shortages, but spot supply is scarce, traders said on Thursda ...
Thursday, 14 January 10
INDONESIA POWER REDUCES COAL SUPPLY
PT Indonesia Power will reduce coal supplies from PT Tambang Batu Bara Bukit Asam to its Suralaya Power Plant. "The coal supply for the plant s ...
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- Miang Besar Coal Terminal - Indonesia
- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- PTC India Limited - India
- Chettinad Cement Corporation Ltd - India
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- Aditya Birla Group - India
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- Star Paper Mills Limited - India
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Rio Tinto Coal - Australia
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Orica Australia Pty. Ltd.
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Indogreen Group - Indonesia
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Antam Resourcindo - Indonesia
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Metalloyd Limited - United Kingdom
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Coalindo Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Edison Trading Spa - Italy
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Mercator Lines Limited - India
- Directorate Of Revenue Intelligence - India
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- GMR Energy Limited - India
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- Maharashtra Electricity Regulatory Commission - India
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