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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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Thursday, 30 July 09
PNOC FORGES JOINT VENTURES AS STEPS UP COAL OPERATIONS
The Philippine National Oil Co.-Exploration Corp. has entered joint venture agreements with food and beverage conglomerate San Miguel and Filipinas ...
Thursday, 30 July 09
NAMANE OF SOUTH AFRICA IN SUDAN COAL DEAL, BUSINESS REPORT SAYS
Namane of South Africa in Sudan Coal Deal, Business Report Says
Namane Resources Ltd. of South Africa signed a coal-supply agreement with the Nat ...
Wednesday, 29 July 09
RP COAL DEMAND TO SURGE BY 2014 - PHILIPPINES UPDATE
CEBU, Philippines - With the entry of new coal-fired power generation plants in the Philippines, the Department of Energy (DOE) projected an increas ...
Wednesday, 29 July 09
INDIA HUNGRY FOR OUR COKING COAL ASSETS
The Australian reported that, INDIA is about to embark on a program of rapid coal sector acquisitions in Australia as it looks to plug a huge annual ...
Tuesday, 28 July 09
SHENZHEN ENERGY INKS COAL PURCHASE CONTRACT WITH CHINA SHENHUA
China Knowledge reported that, Shenzhen Energy Group Co Ltd has signed a five-year contract with China Shenhua Energy Co Ltd, which is engaged in th ...
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- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Planning Commission, India
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Coal and Oil Company - UAE
- Riau Bara Harum - Indonesia
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Malabar Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- MS Steel International - UAE
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Latin American Coal - Colombia
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- Samtan Co., Ltd - South Korea
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Interocean Group of Companies - India
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Australian Coal Association
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Bukit Makmur.PT - Indonesia
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