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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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Friday, 16 April 10
RBCT COAL DISPUTE RESOLVED - MININGMX
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Friday, 16 April 10
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After coking coal and iron ...
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Thursday, 15 April 10
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- Ceylon Electricity Board - Sri Lanka
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Australian Coal Association
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Sakthi Sugars Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Asmin Koalindo Tuhup - Indonesia
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Tamil Nadu electricity Board
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- The Treasury - Australian Government
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- CNBM International Corporation - China
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Central Electricity Authority - India
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Planning Commission, India
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Baramulti Group, Indonesia
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- PTC India Limited - India
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Bayan Resources Tbk. - Indonesia
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Aditya Birla Group - India
- MS Steel International - UAE
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Thiess Contractors Indonesia
- Romanian Commodities Exchange
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Maheswari Brothers Coal Limited - India
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
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