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