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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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Thursday, 22 October 09
2ND UNITED INDONESIA CABINET UNVEILED
The Jakarta Post reported that, President Susilo Bambang Yudhoyono announced his second United Indonesia Cabinet on Wednesday night, comprising 34 m ...
Thursday, 22 October 09
PEABODY SET TO TAP ASIAN DEMAND FOR COAL
The Australian reported that, US coal giant Peabody Energy plans to double its Queensland and NSW coal exports in the next five years, as it looks t ...
Wednesday, 21 October 09
INDONESIA POWER FIRM SEEKS TO DEFER COAL SUPPLIES
Reuters reported that, Indonesia's state power firm is negotiating with two coal producers, including a unit of PT Bumi Resources Tbk, to defer a c ...
Wednesday, 21 October 09
MINING REGULATION GENERATES CONFUSION IN INDONESIA
The Jakarta Globe reported that, Mining industry representatives said on Friday they were confused by a recently issued regulation restricting the w ...
Wednesday, 21 October 09
LAW ACCOMMODATES NATIONAL AND INVESTOR INTERESTS
COALspot.com (Indonesia): According to ESDM, the government has issued five Lawson the energy and mineral resources sector. These laws will prioriti ...
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- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
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- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
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- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
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- San Jose City I Power Corp, Philippines
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- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Uttam Galva Steels Limited - India
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- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
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- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
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- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
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- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
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- Latin American Coal - Colombia
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- Wilmar Investment Holdings
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- Pendopo Energi Batubara - Indonesia
- Malabar Cements Ltd - India
- London Commodity Brokers - England
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- Mercator Lines Limited - India
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
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- Coastal Gujarat Power Limited - India
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- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- Leighton Contractors Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
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- GN Power Mariveles Coal Plant, Philippines
- ASAPP Information Group - India
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Planning Commission, India
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- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
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- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Energy Development Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- Aditya Birla Group - India
- The University of Queensland
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- White Energy Company Limited
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Vizag Seaport Private Limited - India
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- Thiess Contractors Indonesia
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
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- Kideco Jaya Agung - Indonesia
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- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- AsiaOL BioFuels Corp., Philippines
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