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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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- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Madhucon Powers Ltd - India
- Jindal Steel & Power Ltd - India
- Posco Energy - South Korea
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- White Energy Company Limited
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
- Jaiprakash Power Ventures ltd
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Thai Mozambique Logistica
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Trasteel International SA, Italy
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Manunggal Multi Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Marubeni Corporation - India
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
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