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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, 07 August 12
2ND ANNUAL FLOATING TERMINALS
Press Release - After a ground breaking and successful launch in 2011, the 2nd Annual Floating Terminals conferenceis back to address innovation, co ...
Tuesday, 07 August 12
KRISHNAPATNAM PORT HAS DISCHARGED 122,247 MTS OF COAL IN JUST 24 HRS
COALspot.com - Keeping with the tradition of the new records that are set at the Olympic Games 2012, Krishnapatnam Port has also achieved in setting ...
Tuesday, 07 August 12
THE JAKARTA POST EDITORIAL: REVISITING THE MINING LAW
The Jakarta post, one of the leading English news paper in Indonesia writes in its editorial today, what the domestic and foreign investors had drea ...
Tuesday, 07 August 12
BARAMULTI SET TO LIST ON BOURSE IN Q4 - JP
The Jakarta Post reported that, coal miner PT Baramulti Sukses Sarana is preparing to make its shares available to the public in the fourth quarter ...
Tuesday, 07 August 12
REALM RESOURCES COMPLETES STUDY ON ITS KATINGAN RIA COAL PROJECT
COALspot.com - Realm Resources Ltd. has announced that it has completed the Project Study for the Katingan Ria Project in Central Kalimantan, Indone ...
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- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Australian Coal Association
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Toyota Tsusho Corporation, Japan
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- ASAPP Information Group - India
- Mercator Lines Limited - India
- White Energy Company Limited
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- The Treasury - Australian Government
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Maheswari Brothers Coal Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- Posco Energy - South Korea
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Planning Commission, India
- Renaissance Capital - South Africa
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- Energy Development Corp, Philippines
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Economic Council, Georgia
- Mjunction Services Limited - India
- Minerals Council of Australia
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Power Finance Corporation Ltd., India
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- OPG Power Generation Pvt Ltd - India
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Star Paper Mills Limited - India
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- PTC India Limited - India
- Romanian Commodities Exchange
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