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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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Friday, 27 November 09
EXXARO SEES HIGH COAL DEMAND RAISING PRICES
Reuters reported that, South African diversified miner Exxaro Resources said on Thursday it expected coal prices to rise to between $70 and $75 per ...
Friday, 27 November 09
CENTENNIAL SAYS ENERGY-COAL PRICE TO RISE AS CHINA SEEKS FUEL
Bloomberg reported that, Centennial Coal Co., an Australian producer of the fuel, said contract prices are expected to rise in 2010, with Chinese co ...
Friday, 27 November 09
IN FIRST-10-MONTH OF 2009 COAL IMPORTS IN GUANGXI-FANGCHENG EXCEEDED FULL-2008 IMPORTS
According to Customs statistics, during the January-October, Fangcheng port accumulatively imported 3.676mln tons valuing U.S.$370, rising by 53.8% ...
Thursday, 26 November 09
CHINA'S COAL IMPORTS TO RISE BY 170 PERCENT IN 2009
According to the statistics released by China's General Administration of Customs on November 23, China's coal imports for October totaled 11.1 mi ...
Thursday, 26 November 09
CIL EYES OVERSEAS ACQUISITIONS TO BRIDGE SUPPLY GAP
Coal Minister Sriprakash Jaiswal on Wednesday said that state-run coal major Coal India is looking to acquire coal blocks in the US and
othe ...
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- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
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- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- Aditya Birla Group - India
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- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
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- Bulk Trading Sa - Switzerland
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- Singapore Mercantile Exchange
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- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
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- Eastern Energy - Thailand
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- Indian Energy Exchange, India
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- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
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- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- European Bulk Services B.V. - Netherlands
- Chamber of Mines of South Africa
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- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
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- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
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- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
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- SN Aboitiz Power Inc, Philippines
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- CIMB Investment Bank - Malaysia
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- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- ICICI Bank Limited - India
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- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- India Bulls Power Limited - India
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- New Zealand Coal & Carbon
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- VISA Power Limited - India
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- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
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- Renaissance Capital - South Africa
- Siam City Cement - Thailand
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- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
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- Chettinad Cement Corporation Ltd - India
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- Cigading International Bulk Terminal - Indonesia
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- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
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- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- Bhushan Steel Limited - India
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Romanian Commodities Exchange
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- Sindya Power Generating Company Private Ltd
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- MS Steel International - UAE
- Electricity Authority, New Zealand
- Central Java Power - Indonesia
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- Altura Mining Limited, Indonesia
- The University of Queensland
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Madhucon Powers Ltd - India
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- Agrawal Coal Company - India
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- Merrill Lynch Commodities Europe
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
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- Energy Development Corp, Philippines
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