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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, 06 March 09
CHURCHILL STARTS REVERSE DRILLING AT INDONESIAN COAL PROJECT
Miningweekly reported that, Aim-listed minerals explorer Churchill Mining on Thursday stated that reverse drilling at its East Kutai coal project (E ...
Thursday, 05 March 09
UAE FUND PLANS INDONESIA COAL RAIL LINK
News.alibaba reported that, A United Arab Emirates' fund signed a memorandum of understanding on Monday (2 March 2009) with an Indonesian prov ...
Thursday, 05 March 09
CHINA COAL-PRICES LITTLE CHANGED DESPITE PLUNGE ABROAD
China's spot coal prices were little changed from a week earlier, despite the sharp fall in the international market, and demand for coal remains s ...
Thursday, 05 March 09
RAK TO BUILD COAL FIRED POWER STATION
The National Ras al Khaimah, which is developing a coal mine in Indonesia, will build a coal-fired power plant in the emirate in the next two years ...
Wednesday, 04 March 09
COAL: GLOBAL DEMAND WEAKENS
The Jakarta Post reported that, While coal prices were stickier on the way down compared to other commodities like oil, the Newcastle price now sugg ...
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- Salva Resources Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
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