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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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Tuesday, 07 April 20
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- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- The State Trading Corporation of India Ltd
- Bayan Resources Tbk. - Indonesia
- Vizag Seaport Private Limited - India
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- India Bulls Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Bukit Baiduri Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Australian Coal Association
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Indian Oil Corporation Limited
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Antam Resourcindo - Indonesia
- Bhushan Steel Limited - India
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Sical Logistics Limited - India
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Siam City Cement PLC, Thailand
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- Uttam Galva Steels Limited - India
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
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