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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, 12 March 14
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KNOWLEDGE TO ELEVATE
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- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- Larsen & Toubro Limited - India
- TeaM Sual Corporation - Philippines
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Wilmar Investment Holdings
- New Zealand Coal & Carbon
- Deloitte Consulting - India
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- Madhucon Powers Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Bukit Baiduri Energy - Indonesia
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Port Waratah Coal Services - Australia
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- Marubeni Corporation - India
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Leighton Contractors Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Bukit Makmur.PT - Indonesia
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Globalindo Alam Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Samtan Co., Ltd - South Korea
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
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