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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, 09 September 09
CHINESE INTEREST IN AUSTRALIA COAL TICKS UP AS PRICES FALL
After a lull of about two months, Australian thermal coal producers are now seeing renewed interest from Chinese buyers for spot cargoes in the four ...
Wednesday, 09 September 09
SALES FORECAST UP ON BETTER DISTRIBUTION
The Jakarta Post reported that, State coal producer PT Tambang Batubara Bukit Asam (PT BA) expects coal sales to rise by 11 percent next year as it ...
Wednesday, 09 September 09
NTPC HIRES MACQUARIE TO ADVISE INDONESIA COAL MINE PURCHASE
Bloomberg reported that, NTPC Ltd., Asia’s biggest power utility by value, has hired Macquarie Group Ltd. to evaluate a proposed coal mine pur ...
Tuesday, 08 September 09
SOUTH AFRICAN COAL FALLS MOST IN 11 WEEKS ON EXCESSIVE PRICES
Bloomberg reported that, Prices for coal shipped from South Africa’s Richards Bay, site of the world’s largest export terminal for the f ...
Tuesday, 08 September 09
INDIA MAY HAVE A JOINT WORKING GROUP FOR COAL WITH INDONESIA: SRIPRAKASH JAISWAL - PRESS RELEASE
Press Information Bureau of India reported in its web site that, The Coal Ministry has, in principle, agreed to set up a Joint Working Group for coa ...
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- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- San Jose City I Power Corp, Philippines
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Sical Logistics Limited - India
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Coal and Oil Company - UAE
- The University of Queensland
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Vedanta Resources Plc - India
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- Marubeni Corporation - India
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- Parliament of New Zealand
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- The State Trading Corporation of India Ltd
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Indian Energy Exchange, India
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Gujarat Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- SMC Global Power, Philippines
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- PTC India Limited - India
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