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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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Tuesday, 29 November 22
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- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- India Bulls Power Limited - India
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- PTC India Limited - India
- Planning Commission, India
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- Sical Logistics Limited - India
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- Australian Coal Association
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- SMC Global Power, Philippines
- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- Posco Energy - South Korea
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Kapuas Tunggal Persada - Indonesia
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Barasentosa Lestari - Indonesia
- Interocean Group of Companies - India
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Trasteel International SA, Italy
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- Star Paper Mills Limited - India
- Minerals Council of Australia
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Aboitiz Power Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Medco Energi Mining Internasional
- Neyveli Lignite Corporation Ltd, - India
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Bulk Trading Sa - Switzerland
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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