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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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Wednesday, 01 July 09
NEWCASTLE WEEKLY COAL EXPORTS RISE BY 12PCT
Bloomberg reported that Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel, gained 12% last ...
Wednesday, 01 July 09
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The plan of MMTC Ltd, a trading firm under the commerce ministry, to import coal worth Rs 6,000 crore has come under cloud, with the Central ...
Wednesday, 01 July 09
INDONESIAN FIRM BIDS FOR 130,000T COAL FOR NAPOCOR
Top Philippine electricity producer National Power Corp. (Napocor) said on Wednesday it received two bids from Indonesia's PT Trubaindo and its loc ...
Wednesday, 01 July 09
COAL PRICE INDEX TO BE LAUNCHED IN JULY
India will soon get a coal index to track the coal price movement in the country.
India's leading e-commerce company Mjunction Services Ltd will ...
Wednesday, 01 July 09
COAL INDIA SEEKS FASTER APPROVALS, IMPORTS, OVERSEAS MINERS
Coal India Ltd., the world’s biggest coal producer, wants mining approvals sped up to help it boost production to meet a widening supply short ...
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- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Kapuas Tunggal Persada - Indonesia
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- GMR Energy Limited - India
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Wood Mackenzie - Singapore
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Parry Sugars Refinery, India
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Posco Energy - South Korea
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Economic Council, Georgia
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- The University of Queensland
- Central Electricity Authority - India
- Directorate General of MIneral and Coal - Indonesia
- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- Therma Luzon, Inc, Philippines
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