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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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Sunday, 26 April 09
INDONESIAN GOVT SAYS COAL MINES CAUSE WEEKLONG FLOOD - THE JAKARTA POST
Samarinda administration in East Kalimantan admitted openly Thursday that the weeklong flood that paralyzed the city was caused by unruly management ...
Saturday, 25 April 09
FOREIGN SHARE DIVESTMENT STARTING THE 6TH YEAR OF PRODUCTION - MAJALAH TAMBANG
The government would set a divestment scheme for foreign miners, which would require companies to divest their ownership starting the 6th year of pr ...
Saturday, 25 April 09
INDO TAMBANGRAYA MEGAH ALLOCATED USD 126 MILLION FOR CAPITAL SPENDING - MAJALAH TAMBANG
Somyot Ruchirawat, President Director of PT Indo Tambangraya Megah, Tbk (ITMG), has announced the company's total dividend payment of Rp 1,345 per ...
Saturday, 25 April 09
MINING SECTOR IS STILL ON THE SURPLUS - THE JAKARTA POST
The global financial crisis is apparently also having an impact on the mining sector. People are thinking twice about investing in the mining sector ...
Saturday, 25 April 09
ADARO RUNS CATARACT OPERATION PROGRAM - THE JAKARTA POST
As part of its CSR program, thermal coal producer PT Adaro Indonesia has made cataract operations available to residents of Tandjung district, South ...
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- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- Aditya Birla Group - India
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Bayan Resources Tbk. - Indonesia
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- VISA Power Limited - India
- White Energy Company Limited
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Dalmia Cement Bharat India
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- India Bulls Power Limited - India
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Jindal Steel & Power Ltd - India
- Orica Australia Pty. Ltd.
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Intertek Mineral Services - Indonesia
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- Australian Coal Association
- Thiess Contractors Indonesia
- CNBM International Corporation - China
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