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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, 01 April 19
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KNOWLEDGE TO ELEVATE
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Monday, 01 April 19
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- White Energy Company Limited
- Commonwealth Bank - Australia
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- The State Trading Corporation of India Ltd
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Petron Corporation, Philippines
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Parliament of New Zealand
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Australian Coal Association
- Thai Mozambique Logistica
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- McConnell Dowell - Australia
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Minerals Council of Australia
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
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