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