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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, 27 September 14
OIL MARKET CONTANGO: SPECULATION ON FUTURE PRICES CAN BE A RISKY MOVE, EVEN FOR TANKER OWNERS HELLENIC SHIPPING NEWS
Despite the fact that tanker owners can easily use their vessels as floating storage units for oil, in a bid to exploit the current oil market dyna ...
Saturday, 27 September 14
MORE COAL MINERS AGREE TO AMEND CONTRACTS - THE JAKARTA POST
The Energy and Mineral Resources Ministry is in a rush to beat a deadline for the conclusion of numerous memorandums of understanding (MoUs) with t ...
Friday, 26 September 14
INDIA SUPREME COURT RULING TO HIT STEEL, UTILITY EARNINGS, SAYS FITCH
COALspot.com: The 24 September Supreme Court of India (SCI) decision to cancel almost every coal block allocation since 1993 will have a negative f ...
Friday, 26 September 14
U.S WEEKLY COAL PRODUCTION FELL 1.8% WEEK OVER WEEK, SAYS EIA
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.80 million short tons (mmst) of c ...
Friday, 26 September 14
ORACLE SIGNS EPC FRAMEWORK AGREEMENT WITH SEPCO FOR COAL MINE AND POWER PLANT IN PAKISTAN
COALspot.com: Oracle Coalfields PLC, the UK developer of a lignite coal mine and power plant in the south-eastern Sindh Province, Pakistan, has ann ...
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- Bukit Makmur.PT - Indonesia
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Australian Coal Association
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Billiton Holdings Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- PTC India Limited - India
- Bhatia International Limited - India
- Trasteel International SA, Italy
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- MS Steel International - UAE
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Semirara Mining Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Straits Asia Resources Limited - Singapore
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- ASAPP Information Group - India
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Tata Chemicals Ltd - India
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Sarangani Energy Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
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