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