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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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Saturday, 13 February 10
COAL INDIA 2010/11 COAL IMPORTS TO JUMP - EXEC
Coal imports by state-run Coal India Ltd are likely to soar to 6-10 million tonnes in fiscal 2010/11 from an expected 1.5-1.7 million tonnes in the ...
Saturday, 13 February 10
RULES MAY FREE $10B OF MINING PROJECTS IN INDONESIA
The government announced on Friday that it had issued two implementing regulations for the new Mining Law that will clear the way for the developmen ...
Saturday, 13 February 10
INDONESIA OFFERS TAX INCENTIVES FOR RENEWABLE ENERGY
Indonesia is offering tax incentives to develop renewable energy projects, including geothermal energy, to cut dependency on fossil fuels, a decree ...
Friday, 12 February 10
MECHEL EYES 2010 COAL OUTPUT AT 28-29 MLN T
Russian steel and coking coal producer Mechel expects coal output to reach 28-29 million tonnes this year, returning to pre-crisis levels thanks to ...
Friday, 12 February 10
TATA POWER: QUARTERLY BLIP
Although the company’s revenues dipped in the December quarter, its long-term story is intact.
Lower power generation and realisations saw ...
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- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Eastern Energy - Thailand
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- Cement Manufacturers Association - India
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Madhucon Powers Ltd - India
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Planning Commission, India
- Mintek Dendrill Indonesia
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- London Commodity Brokers - England
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- Manunggal Multi Energi - Indonesia
- Australian Coal Association
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Straits Asia Resources Limited - Singapore
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- The University of Queensland
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
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