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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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Monday, 06 April 09
RICHARDS BAY COAL TERMINAL EXPORTS ROSE 5 PERCENT IN MARCH - BLOOMBERG
South Africa’s Richards Bay Coal Terminal, the world’s largest coal-export facility, shipped 5 percent more coal in March than the same ...
Monday, 06 April 09
INDIA'S OSWAL CHEM EYES INDONESIAN COAL MINES -ECONOMICTIMES
Oswal Chemicals and Fertilisers (OCFL), part of Abhay Oswal-led Oswal group, has initiated talks with three separate Indonesian coal firms to ...
Thursday, 02 April 09
FOREIGNERS ALSO CHEER FOR INDONESIA'S THE NEW MINING LAW - MAJALA TAMBANG
Three mining giants, Australia's Rio Tinto along with Canada's Barrick Gold and Southern Arc, are among foreign corporations currently applying fo ...
Wednesday, 01 April 09
INDONESIAN GOVERNMENT REVISES MINING REVENUE TARGET DOWN 26% - THE JAKARTA POST
Government income from mining this year, excluding taxes, is expected to drop by about 26 percent to Rp 11 trillion ($957 million), primarily becaus ...
Wednesday, 01 April 09
INDONESIAN OFFICIAL CLAIMS NEW LEGISLATION IS VINDICATED AS OVERSEAS FIRMS LINE UP FOR MINING LICENSES - THE JAKARTA GLOBE
The Energy and Mineral Resources Ministry is expected to issue six mining licenses under the country’s new mining law over the next two months ...
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- Eastern Coal Council - USA
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- VISA Power Limited - India
- The University of Queensland
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Baramulti Group, Indonesia
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Power Finance Corporation Ltd., India
- Karbindo Abesyapradhi - Indoneisa
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Global Green Power PLC Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Indian Energy Exchange, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- GMR Energy Limited - India
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Directorate General of MIneral and Coal - Indonesia
- Intertek Mineral Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Parliament of New Zealand
- ICICI Bank Limited - India
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
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