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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, 16 November 11
TAX OFFICE VOWS TO CRACK DOWN ON COAL MINERS - JP
The Jakarta Post reported that, the Finance Ministry’s Directorate General of Taxation says that it will strengthen its supervision of coal mi ...
Wednesday, 16 November 11
A STRONG WEEK FOR THE CAPES - BRS
A sharp bounce by the Cape market pushed the BDI up by 3% last week. This was despite a softening in the other indices with the Panamax, Supramax an ...
Monday, 14 November 11
BORL SEEKS 660K MT OF LOW SULPHUR COAL
COALspot.com - BORL India has issued a tender for around 660,000 MT of 4500 - 5500 kcal/kg sub-bituminous Coal.
Bharat Oman Refineries Ltd ...
Sunday, 13 November 11
BUNKER PRICES REMAINED FIRM
COALspot.com - The market seemed to recover this week with the BDI and Cape Index up.
The BDI was up by only about 2.86 pct closing at 1835 point ...
Saturday, 12 November 11
COALINDO ENERGY LAUNCHED INDEX FOR 3400 GAR COAL
COALspot.com - PT Coalindo Energy, in cooperation with Argus Media Limited, launched the coal index for low-rank coal with a calorific value of 3,40 ...
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- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Sinarmas Energy and Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Altura Mining Limited, Indonesia
- The University of Queensland
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Indian Energy Exchange, India
- PTC India Limited - India
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
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- Semirara Mining and Power Corporation, Philippines
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- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
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- Price Waterhouse Coopers - Russia
- International Coal Ventures Pvt Ltd - India
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- Intertek Mineral Services - Indonesia
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- Ministry of Finance - Indonesia
- Alfred C Toepfer International GmbH - Germany
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- Parliament of New Zealand
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- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
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- PowerSource Philippines DevCo
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- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Electricity Authority, New Zealand
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- Tamil Nadu electricity Board
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- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
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- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Power Finance Corporation Ltd., India
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- Petrochimia International Co. Ltd.- Taiwan
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- Kartika Selabumi Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Aditya Birla Group - India
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- White Energy Company Limited
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- Singapore Mercantile Exchange
- The State Trading Corporation of India Ltd
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
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- PNOC Exploration Corporation - Philippines
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
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