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