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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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Friday, 27 November 09
EXXARO SEES HIGH COAL DEMAND RAISING PRICES
Reuters reported that, South African diversified miner Exxaro Resources said on Thursday it expected coal prices to rise to between $70 and $75 per ...
Friday, 27 November 09
CENTENNIAL SAYS ENERGY-COAL PRICE TO RISE AS CHINA SEEKS FUEL
Bloomberg reported that, Centennial Coal Co., an Australian producer of the fuel, said contract prices are expected to rise in 2010, with Chinese co ...
Friday, 27 November 09
IN FIRST-10-MONTH OF 2009 COAL IMPORTS IN GUANGXI-FANGCHENG EXCEEDED FULL-2008 IMPORTS
According to Customs statistics, during the January-October, Fangcheng port accumulatively imported 3.676mln tons valuing U.S.$370, rising by 53.8% ...
Thursday, 26 November 09
CHINA'S COAL IMPORTS TO RISE BY 170 PERCENT IN 2009
According to the statistics released by China's General Administration of Customs on November 23, China's coal imports for October totaled 11.1 mi ...
Thursday, 26 November 09
CIL EYES OVERSEAS ACQUISITIONS TO BRIDGE SUPPLY GAP
Coal Minister Sriprakash Jaiswal on Wednesday said that state-run coal major Coal India is looking to acquire coal blocks in the US and
othe ...
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- Power Finance Corporation Ltd., India
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- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
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- Therma Luzon, Inc, Philippines
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- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
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- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Australian Commodity Traders Exchange
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- Economic Council, Georgia
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- Pipit Mutiara Jaya. PT, Indonesia
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- Simpson Spence & Young - Indonesia
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- Tamil Nadu electricity Board
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- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
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- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- White Energy Company Limited
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- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
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- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
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- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
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- PNOC Exploration Corporation - Philippines
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Commonwealth Bank - Australia
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
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- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
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- Cigading International Bulk Terminal - Indonesia
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- Sindya Power Generating Company Private Ltd
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- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
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- Planning Commission, India
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- Directorate Of Revenue Intelligence - India
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- Central Electricity Authority - India
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
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- Wilmar Investment Holdings
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- PTC India Limited - India
- Heidelberg Cement - Germany
- Kobexindo Tractors - Indoneisa
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
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- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Electricity Authority, New Zealand
- Eastern Coal Council - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Meenaskhi Energy Private Limited - India
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