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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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Monday, 07 September 09
VALE SPENT $300 MILLION AT MOZAMBIQUE COAL MINE
Bloomberg rported that, Vale SA, the world’s biggest iron- ore producer, has so far spent about $300 million of the $1.3 billion investment in ...
Monday, 07 September 09
INDIA MAY BOOST COAL IMPORTS FROM INDONESIA - PLAN JVS
WSJ reported taht, India agreed to study setting up joint ventures with Indonesian companies to acquire coal assets, and look at other means of impo ...
Monday, 07 September 09
INDIAN COAL MAY NOT POWER NEW UMPPS
The Economic Times reported that, bidders for new ultra mega power projects (UMPP) may not get assured coal supplies from domestic mines. As per the ...
Saturday, 05 September 09
THE ECI / CHINA (S7) ROUTE SOFTENED BY ALMOST 12% AND THE CHARTER HIRE WAS AT US$ 16,346 PER DAY - VISTAAR
COALspot.com (Singapore): The dry bulk market continued to be stable with the BDI almost same as last week at 2,415 points.The Panamax index went up b ...
Saturday, 05 September 09
SHANXI AIMS TO MAINTAIN 2009 COAL OUTPUT AT LAST YEAR'S LEVEL
Interfax-China reported that, Shanxi Province, the country's second-largest coal producing region, is aiming to keep its annual coal output a ...
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- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Orica Australia Pty. Ltd.
- The State Trading Corporation of India Ltd
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Agrawal Coal Company - India
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Holcim Trading Pte Ltd - Singapore
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Australian Coal Association
- Port Waratah Coal Services - Australia
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Wood Mackenzie - Singapore
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Posco Energy - South Korea
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- Baramulti Group, Indonesia
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
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