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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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Friday, 27 February 09
WIKA TO ACQUIRE MINING COMPANY
The Jakarta Post reported that, Public listed state construction firm PT Wijaya Karya (Wika) is to acquire a mining contracting firm in the first se ...
Friday, 27 February 09
COASTAL ENERGEN INKS PACT WITH CHINESE FIRM FOR POWER EQUIPMENT
My Digital Fc reported that, Dubai-based Coal and Oil Group, which is setting up a 1,200MW thermal power plant in Tamil Nadu, has tied-up with China ...
Thursday, 26 February 09
GMR INFRA COMPLETES INDONESIAN BUY
Blonnet reported that, GMR Infrastructure Ltd today confirmed the acquisition of an Indonesian coal mining company for a consideration of $80 millio ...
Wednesday, 25 February 09
INDONESIAN GOVERNMENT TO REGULATE MINIMUM COAL SELLING PRICES
The Jakarta Post reported that, To complement the recent enactment of the new mining law, the government is preparing to introduce a coal pricing in ...
Thursday, 19 February 09
GEOTHERMAL ENERGY DOMINATES 10.000 MW POWER PROJECT - ESDM
The role of coal as a source of energy is superseded by geothermal energy to power the second phase of the 10.000 megawatt (MW) power plant project. ...
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- Energy Link Ltd, New Zealand
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- The University of Queensland
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Minerals Council of Australia
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Ministry of Mines - Canada
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- GMR Energy Limited - India
- Australian Commodity Traders Exchange
- Rashtriya Ispat Nigam Limited - India
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- IEA Clean Coal Centre - UK
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Meralco Power Generation, Philippines
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- White Energy Company Limited
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
- Australian Coal Association
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
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