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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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Saturday, 04 July 09
S. AFRICA'S RICHARDS BAY TO CAP NEW COAL VOLUMES, MININGMX SAYS
South Africa’s Richards Bay Coal Terminal is proposing restrictions on the quotas it awards to coal exporters from the so-called Phase 5 expansi ...
Saturday, 04 July 09
DALRYMPLE BAY COAL TERMINAL EXPANSION COMPLETE
BABCOCK & Brown Infrastructure has completed expansion of the Dalrymple Bay Coal Terminal (DBCT) near Mackay, Queensland.
The terminal is now ...
Friday, 03 July 09
CHINA SHENHUA TO DOUBLE COAL CAPACITY BY 2014-PAPER
China Shenhua Energy Co Ltd plans to double its annual coal production capacity by 2014 from this year's level, the China Securities Journal report ...
Friday, 03 July 09
UKRAINE CUTS COAL PRODUCTION 9.3 PERCENT IN H1
Ukraine reduced coal production approximately 9.3%, or by 3.673 million tonnes, to 35.879 million tonnes in the first half of 2009 compared to the s ...
Thursday, 02 July 09
PETCOKE BOOMS AS CEMENT MAKERS TRY TO REPLACE COAL
* Cement makers led by Asia chase petcoke to replace coal
* Petcoke prices up $10/T Feb-Jun, set to rise further
* Domestic U.S. petcoke demand ma ...
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- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- The University of Queensland
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- PTC India Limited - India
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Medco Energi Mining Internasional
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Kapuas Tunggal Persada - Indonesia
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Global Green Power PLC Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Essar Steel Hazira Ltd - India
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- Commonwealth Bank - Australia
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Bhoruka Overseas - Indonesia
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Eastern Coal Council - USA
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- White Energy Company Limited
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- Standard Chartered Bank - UAE
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