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