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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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Saturday, 02 January 10
INDONESIAS COAL OUTPUT RISES BY 5%
Indonesia, Asia’s largest coal exporter, produced 254 million tons of coal in 2009, a 5.8 percent increase from 2008 and well ahead of the gov ...
Saturday, 02 January 10
TAIPOWER FORECASTS COAL DEMAND TO SNAP DECLINE
Taiwan Power Co., Asia's biggest importer of thermal coal, expects its demand for the fuel to rise in 2010 after falling for two years as the islan ...
Friday, 01 January 10
COAL INDIA TO START IMPORTING DIRECTLY
According to sources, the coal major has already finalised tender document to import four million tonnes thermal grade coal for supplies to NTPC. Th ...
Thursday, 31 December 09
INDONESIA SEES 2010 MINING INVESTMENT UP 39 PCT
Reuters reported that, Indonesian mining investment is expected to hit $2.5 billion next year, up from $1.81 billion in 2009, supported by greater c ...
Thursday, 31 December 09
YANDICOOGINA BECOMES FIRST MINE IN AUSTRALIA TO PRODUCE 50 MILLION TONNES A YEAR
COALspot.com Press Release: Rio Tinto's Yandicoogina, Australia's largest-producing iron ore mine, has broken the 50 million tonne mark for annual ...
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- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- Wilmar Investment Holdings
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- Thai Mozambique Logistica
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Directorate Of Revenue Intelligence - India
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Australian Coal Association
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- Planning Commission, India
- Independent Power Producers Association of India
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Xindia Steels Limited - India
- Minerals Council of Australia
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
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