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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, 13 January 10
ADHUNIK GROUP TO BUY 50 PCT IN AUSTRALIA MINE
The Adhunik group of Industries is in talks to acquire 50 percent in an Australian coking coal mine for $100 million, the Economic Times reported on ...
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Wednesday, 13 January 10
CONSOL SELLS FIRST COAL TO CHINA
Coal and natural gas company CONSOL Energy Inc.made its first sale of high-volume coking coal to Asia from its Bailey Mine in Northern Appalachia. T ...
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- Australian Coal Association
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Price Waterhouse Coopers - Russia
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Planning Commission, India
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Bhoruka Overseas - Indonesia
- Independent Power Producers Association of India
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- Merrill Lynch Commodities Europe
- CIMB Investment Bank - Malaysia
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Kumho Petrochemical, South Korea
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- GMR Energy Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- Deloitte Consulting - India
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
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