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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, 21 April 09
INDONESIAN GOVT TO ALLOW UNDERGROUND MINING IN PROTECTED FORESTS - THE JAKARTA POST
The government will issue a regulation allowing mining companies to carry out underground mining in protected forests.
"This regulation will ...
Tuesday, 21 April 09
INDONESIAN GOVT LIKELY TO MISS INVESTMENT TARGETS FOR ENERGY, MINING - THE JAKARTA POST
The total value of investments in energy and mining sectors by the end of the year is likely to be below the government’s target, as a result of ...
Monday, 20 April 09
INDONESIAN COAL MINING ASSOCIATION CALLED TO CONTROL MINERS - MAJALA TAMBANG
The Indonesian Coal Mining Association (ICMA) is called to expand its membership further in view of controlling the conduct of miners in the nationa ...
Monday, 20 April 09
BANPU PLANS TO SHIP 2 MLN T COAL TO CHINA IN 09 - REUTERS
Banpu, Thailand's largest coal miner, plans to increase coal shipments to China by about 30 percent to 2 million tonnes in 2009, company officials ...
Monday, 20 April 09
INDO TAMBANGRAYA 2009 OUTPUT TO GO UP 16% - THE JAKARTA POST
Indonesia's third largest coal producer, publicly listed PT Indo Tambangraya Megah (ITM), is targeting to raise production by 16 percent this year ...
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- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
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- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Pendopo Energi Batubara - Indonesia
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
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- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Chamber of Mines of South Africa
- Energy Link Ltd, New Zealand
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- Thai Mozambique Logistica
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Ministry of Transport, Egypt
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Ministry of Finance - Indonesia
- Goldman Sachs - Singapore
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- GVK Power & Infra Limited - India
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
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- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Sinarmas Energy and Mining - Indonesia
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- Meralco Power Generation, Philippines
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
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- Parliament of New Zealand
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- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Kaltim Prima Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Ambuja Cements Ltd - India
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
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- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- The Treasury - Australian Government
- Minerals Council of Australia
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coal and Oil Company - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
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- Trasteel International SA, Italy
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- Pipit Mutiara Jaya. PT, Indonesia
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- TNB Fuel Sdn Bhd - Malaysia
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