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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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Sunday, 26 April 09
INDONESIAN GOVT SAYS COAL MINES CAUSE WEEKLONG FLOOD - THE JAKARTA POST
Samarinda administration in East Kalimantan admitted openly Thursday that the weeklong flood that paralyzed the city was caused by unruly management ...
Saturday, 25 April 09
FOREIGN SHARE DIVESTMENT STARTING THE 6TH YEAR OF PRODUCTION - MAJALAH TAMBANG
The government would set a divestment scheme for foreign miners, which would require companies to divest their ownership starting the 6th year of pr ...
Saturday, 25 April 09
INDO TAMBANGRAYA MEGAH ALLOCATED USD 126 MILLION FOR CAPITAL SPENDING - MAJALAH TAMBANG
Somyot Ruchirawat, President Director of PT Indo Tambangraya Megah, Tbk (ITMG), has announced the company's total dividend payment of Rp 1,345 per ...
Saturday, 25 April 09
MINING SECTOR IS STILL ON THE SURPLUS - THE JAKARTA POST
The global financial crisis is apparently also having an impact on the mining sector. People are thinking twice about investing in the mining sector ...
Saturday, 25 April 09
ADARO RUNS CATARACT OPERATION PROGRAM - THE JAKARTA POST
As part of its CSR program, thermal coal producer PT Adaro Indonesia has made cataract operations available to residents of Tandjung district, South ...
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- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- South Luzon Thermal Energy Corporation
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Meralco Power Generation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Miang Besar Coal Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bulk Trading Sa - Switzerland
- Star Paper Mills Limited - India
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
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