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Friday, 07 October 11
MINING REGULATIONS , OBSTACLES AND GROWTH : INDIA VS INDONESIA - SUNIL K KUMBHAT
 COALspot.com - The Govt of India has passed long pending Mines & Minerals (Regulation and Development) Bill, 2011, which seeks to replace 1957 act governing mining sector .The bill is now subject to final approval by Indian Parliament.
Indian New Mining Bill
This landmark draft bill that allows local people to get the financial benefits of mining activities. Bill smoothens land acquisitions through higher compensation to people displaced and simplifies relief and rehabilitation issues.
Inadequate compensation and the fear of loss of livelihood have often lead to violent protests by people displaced by mining and related industries, blocking acquisitions of land for several upcoming Mega projects.
The bill, requires coal mining companies to pay 26 per cent of their Profit after Tax to “district mineral foundations” (DMFs), to the district administrations. Funds collected by district collectors will be spent on development projects for the locals, mainly tribal communities residing in the mining areas. In the case of non-coal miners 100 % payment equivalent to royalty required to be paid to state government to affected persons.
If the bill is enacted (which is a big question mark), an estimated amount of US$ 2.04 billion (approx) will be generated per year from miners and an average amount of US$ 36.75 to $ 40.84 Million will be distributed among District Mining Foundations of 60 mineral rich districts. Undoubtedly, it’s a landmark move, to provide justice to scores of tribals who have lost and continue to lose, their land and livelihood across the country due to mining activities.
It is expected that this bill be strong enough to crush the biggest devil of all - the ill-legal mining.
The Bill addresses the burning issue of illegal mining, as it provides for setting up a regulatory authority (National Mining Regulatory Development Authority) to govern the sector. It will have powers to investigate and prosecute the offenders. The authority would also be empowered to look into the cases of organised illegal mining.
This move may not attract private investment in the mining sector, which is badly needed. The mining activity will come down so also production, which Indian economy cannot afford.
The move is all set to push down profits of major mining and power companies, mainly Coal Indian Ltd. Coal India, which will be hit the most as it will have to share 26% of its profit, which means lesser funds available for further mine development for growth, higher production, and distribution of dividends.
Coal India will be left with no Choice but to pass the burden to its customers.
Environmental Consciousness
The environmental impact of mining operations in India is under sharp scrutiny than many other countries. Environmental consciousness is increasing in India.
If environmental issues & challenges are left unmitigated, it will inevitably affect the poorest, rendering trade unsustainable. The moot point is how to ensure the benefits of trade percolate down to the bottom. There is a worldwide increase in globalised economic activity, huge environmental degradation and widening income inequality. So achieving sustainable development will critically depend on proactive resolution of the issues at domestic and international levels.
Never before India has such a high demand for coal, so also environmental consciousness been so high. Both are legitimate & serious issues But the solution is not to clamp down on coal production. India’s soaring energy need is vital for its industrial growth.
India's increasing energy needs are being hampered by regulatory delays for coal mining projects. Sometime back Govt of India (Environment and Forests Ministry) announced many Coal fields as “NO –GO” zones, which is seriously effecting Coal mining projects and Coal production.
In last 4-5 few years there is huge demand of thermal Coal and considering the planned Capacity building in Energy sector there would be hue and cry for Coal demand unless there is substantial increase of Coal Production in India.
Although India is considered as fifth-largest coal reserves in the world much of it is under protected forests and so mining projects face fierce environmental scrutiny.
There is so much hue and cries over the forest conservation. Coal is nature's gift & treasure and coal mines can’t be shifted to another area due to regulatory issues. There is a urgent need to re-examine the regulations and policies associated with exploration and production. Various government regulations concerning forestry and environmental restrictions are hindering mine development. Unless such bottlenecks are addressed, growth in domestic coal production will not match the higher demand.
Independent Regulator
The long term growth of the coal sector in India requires a confident and renewed mindset in developing coal resources through decontrol of the Coal sector, establishment of an independent regulator.
The time has come for Govt of India to establish technically-competent and independent regulators for coal, iron ore and other minerals. The regulators should draw up the necessary regulations and enforcing them strictly, de-politicise the sector and minimise violations of environmental laws and the rights of Local peoples.
Government thru its regulator should ensure that its policy framework attracts large, organised, technologically well-equipped and socially - and environmentally-conscious mining companies which are more susceptible to public pressure and less prone to corrupt and illegal business operating practices. Such companies could effectively develop those mineral reserves which lie either under forest cover or lands populated by local peoples without causing environmental or social damage.
The regulator will have the responsibility of allocating coal mines, price fixation and revision; and performance standards-setting and enforcement, pricing of coal washing, washed coal and by-products generated during the process among other things.
The magnitude of growth in power generation in India will necessarily mean that coal demand will remain very strong. Coal will remain life line for Indian economy for coming many decades till 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 .
Ban on Export of Unprocessed Coal from Indonesia
Recently Govt of Indonesia announced its plan to ban the export of unprocessed and unrefined Coal / Mining products from January 2014.
In its current form, the Draft Value Added Regulation envisages that, starting from January 2014, it will no longer be possible to export Coal from Indonesia having calorific value of 5700 kcal/kg GAD or below.
The proposed ban on exports of coal under the 5,700-kcal/kg will change the dynamics of the global thermal coal market, which has seen spiraling demand from China and India. Such a ban will have a substantial impact on the thermal coal market, as large amounts of low-quality coal from Indonesia are exported to India and China.
Coal quality of 4500 and 5,700 kcal/kg, constitutes a significant portion of exports out of Indonesia and, considering the country accounts for about 30 per cent of the global thermal coal supply, an export ban could reduce worldwide supplies by at least 10-15 per cent.
India is already one of the largest buyers of coal from Indonesia, and continue to maintain this position considering the growth in domestic demand and stagnating production of major miners such as Coal India Ltd. There will be an overall impact on the Indian power sector, as currently about 60 per cent of the total thermal coal imports are coming from Indonesia.
The Draft Regulation raises many challenging issues including, most importantly, how appropriate and realistic is a tough domestic processing and refining obligation in a country like Indonesia. The 5700 kcal/kg GAD minimum upgrading requirement only makes sense if, by 2014, coal upgrading will be a proven technology, widely available to all Indonesian producers of low grade coal.
In the absence of widespread coal upgrading cost effective technology, this could prevent the export from Indonesia of up to 150-175 million metric tons of low grade coal and Govt’s true policy objectives behind the proposed Draft Value Added Regulation requires detailed & critical analysis.
Role of Indonesia
As the situation stands today, India could become the world’s biggest thermal coal importer by 2015 and Indonesia would be one of the Countries to take care of bulk of coal requirement.
India is today one of the fastest growing economies and also has a shortage of power supply. Indonesia is one of the peaceful countries with huge natural resources and exporting coal to many countries for use in power plants for generating energy but it is paradoxical that Indonesia is short of energy. Many Indian companies are capable of sharing power technology and setting up mega power plants in Indonesia
Indonesian private companies can buy equity stakes in India’s power plants in exchange for long-term coal supply. Since India is today one of the fastest growing economies and also has a shortage of power supply then such deals can be beneficial to both parties
Indonesia requires huge investment from foreign investors in infrastructure, Power Generation, Oil & Gas exploration, telecom sector, Port and Rapid transport system. So it is essential to have transparency in all regulations, Legal system and improvement in corporate Governance.
Indonesia's mining industry is undergoing a regulatory overhaul which may weaken the operating health and financial performance of many domestic mining companies.
Besides increased operating uncertainty the new regulations of recent past & proposed may also make the mining industry less attractive to foreign investors. lack of transparency in the legal process and the risk of regulatory duplication and inconsistencies will continue to act as deterrents to substantial investment ,specially foreign direct investments (FDI).
While developed economies struggle with global financial crisis and slowdown of demand, Indonesia (together China and India) could be the consumer market for the future. Similar to China and India, urbanisation is an important driver of Indonesia’s growth. Indonesia is ready to rise in the world economic hierarchy and take its place alongside China and India. Indonesia is now perceived as one of new Asian Tigers , even altering the term of BRIC into BRIIC ( Brazil , Russia , Indonesia , India and China)
Whether BRIC will become BRIIC is yet to be seen. Indonesia is the third fastest growing economy in Asia, behind India and China. It has passed through the economic crisis with firmness unmatched elsewhere in the region and indeed in the world. (cs)
Views expressed herein are personal views of the author and not that of COALspot.com.
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Friday, 18 September 20
INDIA'S COAL-FIRED POWER OUTPUT PICKS UP AS INDUSTRIAL USE RISES - REUTERS
India’s coal-fired electricity generation rose 9.4% in the first half of September, provisional government data showed, as demand from indust ...
Friday, 18 September 20
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China’s benchmark power coal price rose slightly during the past week.
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Thursday, 17 September 20
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Friday, 11 September 20
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KNOWLEDGE TO ELEVATE
Many predictions were made in the run up to the imposition of the MARPOL 2020 sulphur cap, none of which was that the tra ...
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- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- White Energy Company Limited
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Videocon Industries ltd - India
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Kumho Petrochemical, South Korea
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- PTC India Limited - India
- Minerals Council of Australia
- VISA Power Limited - India
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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