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