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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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Wednesday, 03 July 19
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- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- CNBM International Corporation - China
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- The University of Queensland
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Tata Chemicals Ltd - India
- Australian Coal Association
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Sical Logistics Limited - India
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Economic Council, Georgia
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- Bukit Makmur.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
- PTC India Limited - India
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
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