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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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Wednesday, 27 June 12
DIRECTORATE GENERAL OF MINERAL AND COAL OF INDONESIA INTRODUCES ON-LINE SYSTEM FOR MINING PRODUCTS EXPORT APPROVAL
COALspot.com - Directorate General of Mineral and Coal of Indonesia has released "Clear and Clean" certificate for another 33 coal miners ...
Monday, 25 June 12
RIO TINTO MAKES FIRST COAL SHIPMENT FROM MOZAMBIQUE
Rio Tinto has started exporting premium hard coking coal from its Benga Mine in the Moatize Basin in Mozambique. The first shipment of 34,000 tonnes ...
Sunday, 24 June 12
SUPRAMAX FREIGHT MARKET FIRMED UP FROM INDONESIA TO INDIA - VISTAAR
COALspot.com - This week all the segments gained and marked was firm in the Supramax and Handy size sector, where as the Cape and Panamax inde ...
Saturday, 23 June 12
COAL PRICES APPETITE FOR ROLLER-COASTER RIDES
COALspot.com - SGX AsiaClear OTC Coal Swaps have suffered something of a roller-coaster ride in terms of prices during this week. SGX’s Indone ...
Friday, 22 June 12
PRESENT SPOT WEAKNESS IS TEMPORARY, SEASONAL AND RISE AS WINTER APPROACHES - BUMI
COALspot.com - PT Bumi Resources Tbk, the world’s one of the largest coal producer and Indonesia’s largest multi grade coal miner has no ...
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- India Bulls Power Limited - India
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- Thiess Contractors Indonesia
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- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
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- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- International Coal Ventures Pvt Ltd - India
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
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- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
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- Xindia Steels Limited - India
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- Baramulti Group, Indonesia
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- Kapuas Tunggal Persada - Indonesia
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Australian Coal Association
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
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- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
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- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Independent Power Producers Association of India
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- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
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- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CNBM International Corporation - China
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- Sojitz Corporation - Japan
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Eastern Coal Council - USA
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Sical Logistics Limited - India
- The University of Queensland
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
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- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
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- Kideco Jaya Agung - Indonesia
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- European Bulk Services B.V. - Netherlands
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Central Electricity Authority - India
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
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