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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, 02 May 09
COAL PRICES TO RISE ON CHINESE SUPPLY, INDIAN DEMAND, UBS SAYS
Peter Hickson, an analyst with UBS AG in London, comments on prices for thermal coal, burned to generate power. He commented in a report today.
& ...
Friday, 01 May 09
DEUTSCHE, BECKKETT CLAIMING ADARO WIN - THE JAKARTA GLOBE
Both Deutsche Bank AG and Beckkett, an investment firm controlled by Indonesian tycoon Sukanto Tanoto, claimed victory on Tuesday after Singapore&rs ...
Thursday, 30 April 09
SAN MIGUEL IN TALKS TO BUY STAKE IN ADARO - REUTERS
San Miguel Corp is in talks to buy a stake worth about $500 million in Adaro Energy , Indonesia's largest coal producer by market value, the Philip ...
Wednesday, 29 April 09
BAYAN READY TO OPERATE WORLD'S LARGEST COAL QUALITY IMPROVEMENT FACILITY - MAJALAH TAMBANG
PT. Bayan Resources Tbk. (hereinafter referred to as Bayan), an Indonesian coal manufacturer, announced that they are ready to operate the world's ...
Wednesday, 29 April 09
NEW GOV'T REGULATION SHOULD INCORPORATE CONFLICT SETTLEMENT BODY - ICMA (MAJALAH TAMBANG)
A draft government regulation on mineral and coal is currently in a process of completion. The Indonesian Coal Mining Association (ICMA) proposed th ...
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- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Sical Logistics Limited - India
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Australian Commodity Traders Exchange
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- PTC India Limited - India
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Meenaskhi Energy Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- India Bulls Power Limited - India
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Australian Coal Association
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- Sindya Power Generating Company Private Ltd
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Eastern Energy - Thailand
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