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