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