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