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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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Thursday, 03 November 11
DRY BULK MARKET OFFICIALLY IN THE RED ON LOWER CARGO DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept falling yesterday, on lower iron ore demand, which has caused the industry’s benchmark, the BDI (Baltic Dry Index) to ...
Wednesday, 02 November 11
MMTC TO BUY 3.73 MILLION TONS OF COAL FOR 2011- 2013
COALspot.com - India’s state-owned coal and mineral trader MMTC looking for 3.73 million tons of power plant coal for the period 2011 - 2012/ ...
Wednesday, 02 November 11
PANAMAX MARKET BECAME QUIETER AFTER THE RECENT RECOVERY - BRS
There were substantial losses across the board this week: the BDI lost 6.3% to end at 2,018 and the BCI 8.2% to end 3,274. In the smaller sizes the ...
Tuesday, 01 November 11
BORNEO LUMBUNG BUYS 23.8% INTEREST IN BUMI
COALspot.com - PT. Borneo Lumbung Energi (BORN), an Indonesian coking coal producer announces that it has signed a sale and purchase agreement, cond ...
Tuesday, 01 November 11
BAKRIE FORMS STRATEGIC PARTNERSHIP WITH BORNEO - REDUCING DEBT BY USD 1 BILLION
Press Release - Enhancing the standing of “Indonesia Inc.” at the London Stock Exchange PT Bakrie & Brothers Tbk (“BNBR” ...
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- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Planning Commission, India
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Economic Council, Georgia
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- Australian Commodity Traders Exchange
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Semirara Mining Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- ICICI Bank Limited - India
- MS Steel International - UAE
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Alfred C Toepfer International GmbH - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- The University of Queensland
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Ind-Barath Power Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- CNBM International Corporation - China
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