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