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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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Monday, 04 January 10
TOKYO ELECTRIC SEALS XSTRATA COAL DEAL
Tokyo Electric Power Co has agreed to pay about $US85 a tonne for Australian thermal coal in 2010 from miner Xstrata, a source familiar with the pri ...
Monday, 04 January 10
IND-BARATH TO SHIFT PROJECT FROM AP TO TN
Hyderabad-based power producer Ind–Barath is planning to set up a power plant at Tuticorin, Tamil Nadu. The proposed project would attract inv ...
Sunday, 03 January 10
NEWCASTLE THERMAL COAL PRICES FALL IN FIRST DECLINE IN 3 WEEKS
Power-station coal prices at Australia’s Newcastle port, a benchmark for Asia, declined 1.5 percent, falling for the first time in three weeks ...
Sunday, 03 January 10
NTPC SEEKS REPORT ON TRANSPORTING COAL THROUGH WATERWAYS
State-run National Thermal Power Corporation (NTPC), the country’s largest power utility, has asked for a “holistic” feasibility r ...
Sunday, 03 January 10
BHP TO STAY IN MARUWAI AND TO KEEP 75 PERCENT OF THE STAKE
Despite recent statements that it would pull out completely from Indonesia, the world's largest mining company BHP Billiton has now admitted that i ...
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- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- Australian Coal Association
- Petron Corporation, Philippines
- MS Steel International - UAE
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Parliament of New Zealand
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- CIMB Investment Bank - Malaysia
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Lanco Infratech Ltd - India
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- GMR Energy Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Cement Manufacturers Association - India
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- Rashtriya Ispat Nigam Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Agrawal Coal Company - India
- Merrill Lynch Commodities Europe
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
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