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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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Wednesday, 25 March 20
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Jindal Steel & Power Ltd - India
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Parliament of New Zealand
- VISA Power Limited - India
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- White Energy Company Limited
- Larsen & Toubro Limited - India
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- Bhatia International Limited - India
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- Meralco Power Generation, Philippines
- Planning Commission, India
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Gujarat Mineral Development Corp Ltd - India
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- Karaikal Port Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- TeaM Sual Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
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