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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
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, 03 June 09
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- Minerals Council of Australia
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- Mjunction Services Limited - India
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- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- PetroVietnam Power Coal Import and Supply Company
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Planning Commission, India
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Semirara Mining Corp, Philippines
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Parliament of New Zealand
- London Commodity Brokers - England
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Lanco Infratech Ltd - India
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- PTC India Limited - India
- Bhatia International Limited - India
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Indika Energy - Indonesia
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- Singapore Mercantile Exchange
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- Baramulti Group, Indonesia
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- AsiaOL BioFuels Corp., Philippines
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