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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, 26 October 11
PWCS GLOBAL SHIPPING BENCHMARKING ANALYSIS: RECOVERY IN 2010 BUT GREAT UNCERTAINLY FOR 2011
The recovery of global trade in 2010 to the same levels as 2008 led to an improvement in the overall performance of shipping companies in 2010 compa ...
Wednesday, 26 October 11
INDIAN MARKET WAS REMAINED TIGHT THE WHOLE LAST WEEK - BRS
The market once more seems to be at a crossroads. The indices last week remained fairly stable (except for the Panamax sector), ending the week as f ...
Tuesday, 25 October 11
DRY BULK MARKET STEADY, ANALYSTS LOOKING FOR ADDED PRESSURE ON THE MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was unchanged on Monday, with the industry’s benchmark, the BDI (Baltic Dry Index) ending the session at 2,153 points, exa ...
Monday, 24 October 11
NEW HEAD OF INDONESIA'S MINING MINISTRY GETS RAKED OVER THE COALS - JOSEPH KIRSCHKE
COALspot.com - Following Indonesia’s presidential cabinet shakeup last week, many are questioning the qualifications of Energy and Mineral Res ...
Monday, 24 October 11
CHINA QINHUANGDAO COAL PRICE RISES TO HIGHEST IN THREE YEARS - BUSINESSWEEK
Business week reported that, China’s power-station coal price rose to the highest level in three years as power stations and central heating p ...
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- The University of Queensland
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Africa Commodities Group - South Africa
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- GVK Power & Infra Limited - India
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- Central Java Power - Indonesia
- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bharathi Cement Corporation - India
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Siam City Cement - Thailand
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- Ministry of Finance - Indonesia
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Thai Mozambique Logistica
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Australian Coal Association
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