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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, 30 September 09
COKING COAL PRICES MAY TOUCH $200/TN IN 2010-11
Business Standard reported that, Driven by surge in imports of coking coal by China, growth in Japanese steel output and signs of recovery in the In ...
Wednesday, 30 September 09
PURNOMO BIDS 'GOODBYE' TO ENERGY MINISTRY
The Jakarta globe reported that, In what could be construed as a resignation speech from a government official — but perhaps wasn’t &mda ...
Tuesday, 29 September 09
MINING AND ENERGY DAY 2009
The Minister of Energy and Mineral Resources, Purnomo Yusgiantoro led the ceremony marking 2009 Mining and Energy Day celebrations, held at the Depa ...
Tuesday, 29 September 09
BUKIT ASAM REDUCES ITS SALES TARGET
Tempo Interactive reported that, PT Tambang Batubara Bukit Asam Tbk has decided to reduce its sales target this year from 14.5 million tons of coal ...
Monday, 28 September 09
INDONESIA UNLIKELY TO PASS NEW MINING RULES IN 2009
Reuters reported that, Indonesia is unlikely to complete final regulations attached to a new mining and coal law this year, an official said on Mond ...
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- Banpu Public Company Limited - Thailand
- Sarangani Energy Corporation, Philippines
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Bukit Baiduri Energy - Indonesia
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Bulk Trading Sa - Switzerland
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Ministry of Transport, Egypt
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Indian Energy Exchange, India
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Mintek Dendrill Indonesia
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- ASAPP Information Group - India
- Agrawal Coal Company - India
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Deloitte Consulting - India
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- Coal and Oil Company - UAE
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
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