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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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Sunday, 22 December 19
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- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Binh Thuan Hamico - Vietnam
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- PTC India Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Kepco SPC Power Corporation, Philippines
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Minerals Council of Australia
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Coal and Oil Company - UAE
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Romanian Commodities Exchange
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- White Energy Company Limited
- Medco Energi Mining Internasional
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Planning Commission, India
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Siam City Cement - Thailand
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Posco Energy - South Korea
- Attock Cement Pakistan Limited
- Kaltim Prima Coal - Indonesia
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Australian Coal Association
- Coastal Gujarat Power Limited - India
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