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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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Tuesday, 28 April 09
S'PORE COURT RULES AGAINST DEUTSCHE ON ASSET SALE - REUTERS
Singapore's highest court has ruled that Deutsche Bank (DBKGn.DE) may have to pay unspecified damages to an investment firm as it did not get the b ...
Tuesday, 28 April 09
WORLD THERMAL COAL PRICE EXPECTED TO CRASH - PURCHASING.COM
Macquarie Bank sees 50% drop to $60/ton in 2009
Macquarie Bank today forecast the 2009 average market price for world thermal coal at $60/ton, a ...
Tuesday, 28 April 09
THAI LANNA TO OPEN NEW INDONESIAN MINE BY Q3 - REUTERS
Thailand's Lanna Resources PCL LANN.BK said on Monday it planned to open a new coal mine in Indonesia by the third quarter of 2009 with an initial ...
Tuesday, 28 April 09
SOUTH AFRICAN EXPORT COAL RETREATS ON WEAKER EUROPEAN DEMAND - BLOOMBERG
Prices for coal shipped from South Africa’s Richards Bay, site of the world’s largest export terminal for the fuel, fell for a second co ...
Monday, 27 April 09
INDONESIA S.KALIMANTAN GETS COAL TRUCKS OFF PUBLIC ROADS - REUTERS
A local government in one of Indonesia's top coal-producing areas has banned coal and palm oil firms from using public roads because of the damage ...
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- Kideco Jaya Agung - Indonesia
- Kartika Selabumi Mining - Indonesia
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Intertek Mineral Services - Indonesia
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Central Electricity Authority - India
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Parliament of New Zealand
- Marubeni Corporation - India
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Sindya Power Generating Company Private Ltd
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Economic Council, Georgia
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Commonwealth Bank - Australia
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- The University of Queensland
- The State Trading Corporation of India Ltd
- Georgia Ports Authority, United States
- Bhatia International Limited - India
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Planning Commission, India
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