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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, 20 October 11
CAPESIZE - TUBARAO /QINGDAO BEING FIXED AT STRONG US$ 29.75 PMT
Handy
The Atlantic market is quite steady, and market seems to be around the same levels as last week. Fewer fixtures reported though. ...
Thursday, 20 October 11
BRACKEN INTERNATIONAL MINING LISTS ON FRANKFURT STOCK EXCHANGE
Press Release - Bracken International Mining (Code:1BM) listed on the Deutsche Börse’s Frankfurt Stock Exchange today at €1.00 with ...
Thursday, 20 October 11
CAPESIZES, SUPRAMAXES LEAD GAINS FOR DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Struggling to find additional support, but still managing to post gains, the dry bulk market has stabilized itself on higher levels again yesterday, ...
Wednesday, 19 October 11
METALLURGICAL COAL PRICES TO DROP BELOW US$240/TONNE - WOOD MACKENZIE
Wood Mackenzie Says Metallurgical Coal Prices to Drop Below US$240/tonne by Q4 2012 But Long-term Demand Fundamentals Remain Robust
Wood Mackenzi ...
Wednesday, 19 October 11
SUPRAMAX MARKET WAS VERY FIRM LAST WEEK - BRS
With all sectors contributing positively, the BDI ended the week at 2,173 points (+8.6%), its highest level so far in 2011. The BCI stood at 3,587 ( ...
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- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Tamil Nadu electricity Board
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- International Coal Ventures Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- Central Electricity Authority - India
- MS Steel International - UAE
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Madhucon Powers Ltd - India
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Krishnapatnam Port Company Ltd. - India
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Global Green Power PLC Corporation, Philippines
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- PTC India Limited - India
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- PowerSource Philippines DevCo
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- Sinarmas Energy and Mining - Indonesia
- The University of Queensland
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Posco Energy - South Korea
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- Australian Coal Association
- Georgia Ports Authority, United States
- White Energy Company Limited
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- Neyveli Lignite Corporation Ltd, - India
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