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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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Thursday, 30 January 20
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The club has received reports that low sulphur fuel is not currently readily available in all Indonesian ports and that there are local shortages.
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- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Vizag Seaport Private Limited - India
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Indian Energy Exchange, India
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Electricity Authority, New Zealand
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Minerals Council of Australia
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Australian Coal Association
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
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- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
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