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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, 12 October 11
INDONESIAS COAL RUSH - JOSEPH KIRSCHKE
COALspot.com - Last winter, the Chinese government mobilized thousands of soldiers and reservists of the People’s Liberation Army to the port ...
Wednesday, 12 October 11
CAPESIZE - A SURPRISE JUMP IN RATES - BRS
There was a surge across all sizes last week, resulting in the BDI gaining 101 points to end the week at 2,000 points (+5.3%). The BCI reached 3,218 ...
Wednesday, 12 October 11
CAPESIZE FREIGHT RATES BOUND TO RETREAT FROM 2011 HIGHS ON THE BACK OF TONNAGE OVERSUPPLY SAYS BIMCO
According to Nikos Roussanoglou, Hellenic Shipping, with the BDI (Baltic Dry Index) breaking yet another 2011 high yesterday and ending the se ...
Tuesday, 11 October 11
GLENCORE, SUITOR FOR BUMI PLC? - INSIDER STORIES
Insider Stories reported that, the largest commodities trader in the world, Glencore International Plc, is considering an opportunity to acquire a m ...
Tuesday, 11 October 11
RENUKA COALINDO BUYS JAMBI COAL
PT Renuka Coalindo Tbk, formerly PT Allbond Makmur Usaha Tbk plans to acquire PT Jambi Prima Coal holder of mining concession in Pauh, Sa ...
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- Electricity Generating Authority of Thailand
- White Energy Company Limited
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- Medco Energi Mining Internasional
- Planning Commission, India
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- Parliament of New Zealand
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Indogreen Group - Indonesia
- London Commodity Brokers - England
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- Heidelberg Cement - Germany
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Mercator Lines Limited - India
- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
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