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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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Saturday, 15 October 11
BUNKER PRICES AND DEMANDS PUSHED FREIGHT RATES UP - VISTAAR
COALspot.com - The market continued to be firm with all segments moving up with biggest gain in Handy size segment up by 15 pct. The BDI was u ...
Saturday, 15 October 11
BENGAL COAL IMPORT TEST - THE TELEGRAPH
The Telegraph reported that, the power position in Bengal improved today but alarm bells are ringing over imported coal stocks that are running out ...
Friday, 14 October 11
CAPE DERIVATIVES MARKET HAS NOT REFLECTED OWNERS EXPECTATIONS' - FEARNBULK
Handy
The Atlantic market continued its upward trend, with fresh cargo entering the market. Skaw Passero to US Gulf climbed US$ 1500 from la ...
Friday, 14 October 11
ADARO BUYS SERVO MEDA FOR RP200 BIO - INSIDER STORIES
Insider Stories reported that, PT Adaro Energy Tbk (ADRO) announced that its subsidiary PT Alam Tri Abadi (ATI), acquired 35% stake in PT Serv ...
Thursday, 13 October 11
DRY BULK MARKETS RALLY CONTINUES, BUT ANALYSTS WARN IT WILL BE SHORTLIVED - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market continued its push forward yesterday, for yet another session, as the BDI (Baltic Dry Index), the industry’s benchmark edg ...
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Oldendorff Carriers - Singapore
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Bayan Resources Tbk. - Indonesia
- Port Waratah Coal Services - Australia
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Energy Development Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Petron Corporation, Philippines
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Parry Sugars Refinery, India
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- The University of Queensland
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- London Commodity Brokers - England
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- Electricity Authority, New Zealand
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
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