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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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Friday, 12 June 09
THERMAL COAL PRICE REMAINS STABLE IN SHANXI - STEEL GURU
It is reported that coming into June, no major changes are seen in coal supply-demand relations in Shanxi province. Statistics of Qinhuangdao port, ...
Thursday, 11 June 09
PT NALCO PLANS TO CONSTRUCT COAL-FIRED POWER PLANT IN SOUTH SUMATRA - ENERGY BUSINESS REVIEW
PT Nalco (National Aluminium Company Limited), an Indian-based company, plans to construct a coal-fired power plant in South Sumatra. The company in ...
Thursday, 11 June 09
COAL PRODUCERS TO SEE BOOST IN DEMAND FROM ASIA PACIFIC - JAKARTA POST
The Jakarta Post reported that, at the recent 15th Coaltrans conference in Bali, we noted concerns related to rising oil prices at a faster pace tha ...
Wednesday, 10 June 09
BHP TO CUT 450 JOBS AT INDONESIAN COAL PROJECT - REUTERS
Reuters reported that, BHP Billiton Ltd will lay off all 450 workers at its Indonesian coal project after deciding not to go ahead with the pr ...
Monday, 08 June 09
PTC INDIA TO ACQUIRE COAL MINES IN AUSTRALIA, INDONESIA - PTI NEWS
PTI reported that, State-owned Power Trading Corp today said it would acquire coal properties overseas and has identified mines in Australia and Ind ...
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- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Marubeni Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Formosa Plastics Group - Taiwan
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- Chamber of Mines of South Africa
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Uttam Galva Steels Limited - India
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- Trasteel International SA, Italy
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Meralco Power Generation, Philippines
- Timah Investasi Mineral - Indoneisa
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- The University of Queensland
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Ambuja Cements Ltd - India
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