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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, 31 October 09
FLSMIDTH WINS MAJOR INDIAN COAL HANDLING PROJECT
Top global supplier of minerals processing and materials handling equipment, FL smidth, has won another important coal handling contract in India
...
Saturday, 31 October 09
INDIA OPENING POWER SECTOR TO PRIVATE INVESTMENT, COAL STILL THE FUEL OF CHOICE
Energy Tribune reported that, With coal-fired power plants as the primary source, India’s electricity generation sector space has been dominat ...
Friday, 30 October 09
MINERS TOLD TO SPEND ON LOCAL SERVICE FIRMS
The energy and mineral resources ministry has issued a ministerial regulation ordering mining firms to prioritize hiring domestic service companies ...
Friday, 30 October 09
TATA POWER MAY BUY COAL FROM RIVERSDALE'S MOZAMBIQUE MINES
Bloomberg reported that, Tata Power Ltd., India’s biggest electricity generator outside state control, may buy coal from a mine in Mozambique ...
Thursday, 29 October 09
MMTC AWARDED 12.5 MILLION TONS TO THREE INDIAN TRADERS
COALspot.com (India): State-run trading firm MMTC awarded tenders for the import of 12.5 million tonnes of coal for NTPC to three Indian coal trader ...
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- Uttam Galva Steels Limited - India
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- Eastern Energy - Thailand
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- Madhucon Powers Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- MS Steel International - UAE
- Eastern Coal Council - USA
- Deloitte Consulting - India
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- The University of Queensland
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- VISA Power Limited - India
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Global Business Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Mercator Lines Limited - India
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- White Energy Company Limited
- Indogreen Group - Indonesia
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- Parliament of New Zealand
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement - Thailand
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
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