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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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Wednesday, 12 August 20
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- Romanian Commodities Exchange
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- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Wilmar Investment Holdings
- VISA Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- Sojitz Corporation - Japan
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Central Electricity Authority - India
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- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Lanco Infratech Ltd - India
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Ind-Barath Power Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Africa Commodities Group - South Africa
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- Mintek Dendrill Indonesia
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- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- Energy Development Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
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- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
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