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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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Friday, 27 February 09
WIKA TO ACQUIRE MINING COMPANY
The Jakarta Post reported that, Public listed state construction firm PT Wijaya Karya (Wika) is to acquire a mining contracting firm in the first se ...
Friday, 27 February 09
COASTAL ENERGEN INKS PACT WITH CHINESE FIRM FOR POWER EQUIPMENT
My Digital Fc reported that, Dubai-based Coal and Oil Group, which is setting up a 1,200MW thermal power plant in Tamil Nadu, has tied-up with China ...
Thursday, 26 February 09
GMR INFRA COMPLETES INDONESIAN BUY
Blonnet reported that, GMR Infrastructure Ltd today confirmed the acquisition of an Indonesian coal mining company for a consideration of $80 millio ...
Wednesday, 25 February 09
INDONESIAN GOVERNMENT TO REGULATE MINIMUM COAL SELLING PRICES
The Jakarta Post reported that, To complement the recent enactment of the new mining law, the government is preparing to introduce a coal pricing in ...
Thursday, 19 February 09
GEOTHERMAL ENERGY DOMINATES 10.000 MW POWER PROJECT - ESDM
The role of coal as a source of energy is superseded by geothermal energy to power the second phase of the 10.000 megawatt (MW) power plant project. ...
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- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- Timah Investasi Mineral - Indoneisa
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Samtan Co., Ltd - South Korea
- Interocean Group of Companies - India
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- PTC India Limited - India
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Sical Logistics Limited - India
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- Karbindo Abesyapradhi - Indoneisa
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ICICI Bank Limited - India
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- White Energy Company Limited
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
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