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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, 24 May 10
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- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
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- Baramulti Group, Indonesia
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
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- Thiess Contractors Indonesia
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- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Uttam Galva Steels Limited - India
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
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- Star Paper Mills Limited - India
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- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
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- Mjunction Services Limited - India
- London Commodity Brokers - England
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Australian Coal Association
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Deloitte Consulting - India
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
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