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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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Tuesday, 25 August 09
INDIAN FIRM TO INVEST $44 MN IN INDONESIA
Economic Times - India Times reported that, BEML Limited, India-based second largest heavy equipment producer in Asia, will invest $44 million in In ...
Tuesday, 25 August 09
BHARAT LOOKS TO BULLDOZE RIVALS WITH LOWER PRICES
The Jakarta Globe reported that, The country’s two established heavy equipment suppliers now have a competitor in the form of Indian firm Bhar ...
Tuesday, 25 August 09
PIKE RIVER DELAYS COAL EXPORTS FROM NEW ZEALAND MINE
South African mining Weekly reported that, The first 60,000-t export shipment from ASX-listed Pike River Coal’s new mine has been delayed unti ...
Monday, 24 August 09
INDONESIAN GOVT ASKED TO CONTROL COAL TRADERS, BROKERS
The Jakarta Post, the leading English news paper in Indoneisa reported that, Businesses are urging the government to bring all coal traders and brok ...
Monday, 24 August 09
10,000 MW TO BE GENERATED THROUGH THAR COAL RESERVES BY 2020
Four projects of 2450 MW approved; govt to invest Rs80bn in five years on infrastructure
The News Pakistan reported that, The Thar Coal a ...
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- Aditya Birla Group - India
- Australian Coal Association
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
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- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- India Bulls Power Limited - India
- Minerals Council of Australia
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- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Bhatia International Limited - India
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- The University of Queensland
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- SMC Global Power, Philippines
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- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
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- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
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- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
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- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
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- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Central Java Power - Indonesia
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
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- Renaissance Capital - South Africa
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
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- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- Coastal Gujarat Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- White Energy Company Limited
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- Thiess Contractors Indonesia
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- Deloitte Consulting - India
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Bhushan Steel Limited - India
- Mercuria Energy - Indonesia
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Thai Mozambique Logistica
- Planning Commission, India
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
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