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