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