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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, 27 June 09
HEAVY CONGESTION AT AUSTRALIAN PORTS REACHING ALL TIME HIGH TO 120 SHIPS IN EAST COAST AUSTRALIA - VISTAAR SHIPPING
COALspot.com (Singapore): The market this week was a bit soft and the BDI was down by almost 10 pct and closed at 3,703 points.
The drop in BDI i ...
Friday, 26 June 09
INDONESIA INVESTORS EYE BHP BILLITON COAL PROJECT
About four Indonesian investors are interested in taking over a coal project owned by BHP Billiton Ltd, a senior government mining official said.
...
Friday, 26 June 09
SOUTH AFRICA'S CONSULTING GROUP OPENS OFFICES IN CHINA, INDONESIA
Consulting engineering company SRK Consulting has opened new offices in Asia to cope with the growing demand for its services in the region.
The ...
Friday, 26 June 09
RUSSIA MECHEL TO DELIVER 2 MLN T COKING COAL TO ASIA
Russian steel and coal producer Mechel said on Thursday it had signed contracts to deliver about 2 million tonnes of coking coal concentrate to unna ...
Friday, 26 June 09
SA COAL EXPORTS UNLIKELY TO BREACH 65MT THIS YEAR
Coal volumes railed to South Africa’s Richards Bay Coal Terminal (RBCT) during the rain-affected first quarter of 2009 had fallen well short o ...
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- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Singapore Mercantile Exchange
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- McConnell Dowell - Australia
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Latin American Coal - Colombia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Sindya Power Generating Company Private Ltd
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Eastern Energy - Thailand
- Baramulti Group, Indonesia
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- The University of Queensland
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Intertek Mineral Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Indika Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Edison Trading Spa - Italy
- White Energy Company Limited
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Wilmar Investment Holdings
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Coal Association
- Bhushan Steel Limited - India
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Orica Australia Pty. Ltd.
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
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