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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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- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Globalindo Alam Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Pendopo Energi Batubara - Indonesia
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- The University of Queensland
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- Bayan Resources Tbk. - Indonesia
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Ministry of Transport, Egypt
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Chettinad Cement Corporation Ltd - India
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Australian Coal Association
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Parliament of New Zealand
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Bulk Trading Sa - Switzerland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- White Energy Company Limited
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Videocon Industries ltd - India
- Trasteel International SA, Italy
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