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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, 28 October 11
RISING COAL PRICES TO WORSEN CHINA'S WINTER POWER CRUNCH - CRI ENGLISH
CRI English reported that, the rising price of coal is fueling concerns about a power crunch set to plague China this winter, analysts said.
The ...
Thursday, 27 October 11
CAPESIZE REACHING NEW HIGHS - FEARNLEYS
Handy
Pacific market has mixed sentiments with tonnages fixed at firm levels and some tonnages in feast failing on subs.For indo-india, large eco ...
Thursday, 27 October 11
DRY BULK MARKET EDGES DOWN AS CHINAS IRON ORE DEMAND LOSES GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A plunge in Chinese iron ore demand, as a result of high steel inventories and a bleak outlook regarding steel prices, has prompted the dry bulk mar ...
Thursday, 27 October 11
BUKIT ASAM 3Q PROFIT SURGES 66.91%
Insider Stories reported that, the state-controlled coal miner PT Bukit Asam Tbk (PTBA) experienced a 66.91% increase in its net profit during a per ...
Wednesday, 26 October 11
MOODYS SEES MORE GROWTH FOR INDONESIAN COAL MINERS - THE JAKARTA GLOBE
The Jakarta Globe reported that, Indonesia’s coal mining industry looks set to grow despite an uncertain global economic outlook, according to ...
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- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Indika Energy - Indonesia
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Edison Trading Spa - Italy
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- VISA Power Limited - India
- Marubeni Corporation - India
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- Rashtriya Ispat Nigam Limited - India
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- PTC India Limited - India
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Kumho Petrochemical, South Korea
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- Bhushan Steel Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Parliament of New Zealand
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
- Miang Besar Coal Terminal - Indonesia
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Latin American Coal - Colombia
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- International Coal Ventures Pvt Ltd - India
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Posco Energy - South Korea
- ICICI Bank Limited - India
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