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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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Wednesday, 09 September 20
MARKET INSIGHT - INTERMODAL
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Saturday, 05 September 20
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India has traditionally considered itself lucky to have been endowed with abundant coal reserves, which it has sought to use to meet its energy nee ...
Saturday, 05 September 20
FINANCING COMPLETE FOR 900MW FIFTH PHASE OF MASSIVE DUBAI SOLAR PARK: ARABIAN BUSINESS
Saudi-based ACWA Power on Thursday announced it has completed the signing of all financing agreements for the fifth phase of the Mohammed bin Rashi ...
Saturday, 05 September 20
POLISH COAL DEMAND EXPECTED TO FALL BY 7 MLN TONNES NEXT YEAR: MINISTER - REUTERS
Poland’s demand for coal is expected to fall by around 7 million tonnes next year, or more than 10% of annual hard coal production, after a d ...
Saturday, 05 September 20
PAKISTAN'S NEW 27-YEAR POWER PLAN RISKS LOCKING IN LONG-TERM OVERCAPACITY, LEAVING IMPORTED COAL AND LNG PLANTS STRANDED - IEEFA
Wind and solar, the country’s cheapest source of new generation, also overlooked
Pakistan risks locking itself into building m ...
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- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- Pipit Mutiara Jaya. PT, Indonesia
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Central Electricity Authority - India
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Semirara Mining and Power Corporation, Philippines
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- Sarangani Energy Corporation, Philippines
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- SMC Global Power, Philippines
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Renaissance Capital - South Africa
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- The University of Queensland
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Videocon Industries ltd - India
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
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