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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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Wednesday, 25 November 09
NAPOCOR SCRAPS AWARD OF 715,000 TONS COAL
Top Philippine electricity producer National Power Corp. (Napocor) said on Wednesday it had cancelled plans to award 715,000 tons in coal supply con ...
Wednesday, 25 November 09
RISING FREIGHT RATES HIT COAL IMPORTERS
While state-owned NTPC’s 12.5 million tonne coal import order may have been aimed at plugging the shortage of coal at its thermal power plants ...
Wednesday, 25 November 09
CSN TO BUY RIVERSDALE STAKE TO BOOST COAL SUPPLIES
Cia. Siderurgica Nacional SA plans to buy 16.3 percent of Australian coal-exploration company Riversdale Mining Ltd. for about A$190.5 million ($175 ...
Tuesday, 24 November 09
ICRA DOWNGRADES TNPL`S RATING TO LAA
Credit rating agency, ICRA has revised the long term rating for the Rs 11.25 billion long-term fund-based bank facilities and Rs 1.5 billion non-con ...
Monday, 23 November 09
INDONESIA MINING RULE THREATENS INVESTMENT DRIVE
A new Indonesian mining rule, limiting contract work that can be outsourced and favouring local players, is shaping up as a new blow to plans ...
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- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- PTC India Limited - India
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Heidelberg Cement - Germany
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- Gujarat Sidhee Cement - India
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Eastern Energy - Thailand
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
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