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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, 29 May 09
INDONESIA PLANS "CLEARING HOUSE" FOR COAL - ALIBABA
Alibaba reported that, Indonesia, the world's biggest thermal coal exporter, plans to set up an agency similar to a clearing house to trade stocks ...
Friday, 29 May 09
INDIKA EYES MORE ACQUISITIONS - THE JAKARTA POST
Having nearly completed the acquisition of engineering and mining company PT Petrosea, energy company PT Indika Energy is preparing for more acquisi ...
Friday, 29 May 09
PTBA PAYS DIVIDENDS OF RP 371.5 A SHARE - THE JAKARTA POST
The annual shareholders' meeting of state-controlled coal producer PT Tambang Batubara Bukit Asam (PTBA) approved on Thursday the allocation of 50 ...
Thursday, 28 May 09
INDIANS CHOOSE SOUTH AFRICA COAL OVER INDONESIAN - MINEWEB (REUTERS)
South African cargoes are about $4 a tonne cheaper than Indonesian coal, as a result India now prefers South Africa .
Indian imports of South Afr ...
Wednesday, 27 May 09
NEWCASTLE PORT'S WEEKLY COAL EXPORTS INCREASE 3.6% - BLOOMBERG
Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel, rose 3.6 percent last week while the num ...
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- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- India Bulls Power Limited - India
- Power Finance Corporation Ltd., India
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- Marubeni Corporation - India
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Minerals Council of Australia
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Australian Coal Association
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate Of Revenue Intelligence - India
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- PTC India Limited - India
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- MS Steel International - UAE
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Cigading International Bulk Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
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