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