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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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Thursday, 01 March 12
BUKIT ASAM TARGETS EUROPEAN INVESTORS
COALspot.com - PT. Bukit Asam (persero) Tbk, Indonesian state owned coal miner is planning to conduct road show in Europe next week to target at Eur ...
Thursday, 01 March 12
INDO-INDIA, LARGE ECO SUPRA CAN FETCH CLOSE TO USD 9K DOP N.CHINA - FEARNLEYS AS
Handy
The Atlantic Handysize market did not see any signs for recovery this week. It is still a major lack of spot cargoes and an oversupply of pro ...
Wednesday, 29 February 12
69 MINERS AGREE TO RENEGOTIATE CONTRACTS - THE JAKARTA POST
The Jakarta Post, one of the leading English news papaer in Indonesia reported that, as many as 60 coal contracts-of-work (PKP2B) and nine non-coal ...
Wednesday, 29 February 12
PUTTING COAL GASIFICATION TO WORK
Clifford Reese of the SSOE Group looks at practical solutions for district energy leaders who wish to implement clean coal technology.
Coal fuels ...
Monday, 27 February 12
COAL MINING PROFITS TOO HIGH, SAYS GOVT - TEMPO INTERACTIVE
Tempo Interactive reported that, Energy and Mineral Resources Deputy Minister of Indonesia Widjajono Partowidagdo has criticized coal-mining compani ...
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- Ministry of Mines - Canada
- Planning Commission, India
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Price Waterhouse Coopers - Russia
- ASAPP Information Group - India
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- PTC India Limited - India
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Goldman Sachs - Singapore
- Semirara Mining Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Australian Commodity Traders Exchange
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
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