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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, 03 June 09
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IPL-2 OVER, INDIAN COAL LEAGUE BEGINS IN SOUTH AFRICA - ECONOMICTIME
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- Cement Manufacturers Association - India
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- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
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- Deloitte Consulting - India
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- Global Coal Blending Company Limited - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
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- Posco Energy - South Korea
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- Parliament of New Zealand
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- Electricity Generating Authority of Thailand
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- Latin American Coal - Colombia
- Mjunction Services Limited - India
- The University of Queensland
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- Bangladesh Power Developement Board
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- Petron Corporation, Philippines
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- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Anglo American - United Kingdom
- Meralco Power Generation, Philippines
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- Australian Commodity Traders Exchange
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- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- VISA Power Limited - India
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Planning Commission, India
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Australian Coal Association
- MS Steel International - UAE
- Romanian Commodities Exchange
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- White Energy Company Limited
- Billiton Holdings Pty Ltd - Australia
- Ministry of Finance - Indonesia
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- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tamil Nadu electricity Board
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- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
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- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
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- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- The State Trading Corporation of India Ltd
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- India Bulls Power Limited - India
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- Standard Chartered Bank - UAE
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- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
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- Tata Chemicals Ltd - India
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- Minerals Council of Australia
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- CIMB Investment Bank - Malaysia
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