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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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Thursday, 09 January 20
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- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Heidelberg Cement - Germany
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
- PowerSource Philippines DevCo
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- Minerals Council of Australia
- Deloitte Consulting - India
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- Australian Commodity Traders Exchange
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- VISA Power Limited - India
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