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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, 04 April 12
CHURCHILL MINING TO ACCELERATE INTERNATIONAL ARBITRATION AGAINST INDONESIA
Churchill Mining plc (AIM: CHL), advises that notations on the Indonesian Supreme Court's register of cases shows the Supreme Court has rejected th ...
Monday, 02 April 12
BANGLADESH EYEING INDONESIA FOR COAL
COALspot.com - The high level executives of Center for Environmental and Geographic Information Services (CEGIS) of Bangladesh is visiting Ind ...
Monday, 02 April 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
The first quarter of the New Year ended with the BDI standing 42% above from the 26 years’ bottom low of 662 points on February 1st, and a pos ...
Saturday, 31 March 12
THE BDI CONTINUED TO MOVE UPWARD - VISTAAR
COALspot.com - The BDI continued to move upward and rose by 2.86 pct closing at 934 points.
The cape index was up by 3.14 pct closing at 1,412 po ...
Saturday, 31 March 12
SRI LANKA IMPORTS 152,555 MT OF INDONESIAN COAL IN FEBRUARY
COALspot.com: Indonesia, the world largest coal exporter, shipped 27.126* million tons of coal in February 2012, compared to 28.21* million to ...
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- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
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- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
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- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
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- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Siam City Cement PLC, Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
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- Minerals Council of Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- CNBM International Corporation - China
- Central Electricity Authority - India
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- Vizag Seaport Private Limited - India
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- The University of Queensland
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