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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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Tuesday, 27 September 11
A STRONG REBOUND FOR THE CAPE MARKET - BRS
A strong rebound for the Cape market, as cargoes continued to flow into the market and tonnage remained tight in the Atlantic, according to Barry Ro ...
Tuesday, 27 September 11
INTRACO SEALS US$25.3 MIO ORDER - INSIDER STORIES
Insider Stories reported that, Heavy equipment distributor PT Intraco Penta Tbk (INTA) obtained a US$25.3 million order on hand of heavy equipments ...
Sunday, 25 September 11
THE CHARTER RATES FOR INDONESIA TO INDIA WAS FIRM - VISTAAR
COALspot.com - The freight market moved up sharply with the cape Index up by 11 pct pushing the BDI by almost 6 pct and closing at 1,920 point ...
Saturday, 24 September 11
GOVT PLANS TO RENEGOTIATE ALL CONTRACTS INCLUDING FREEPORT - JP
The Jakarta Post reported that, the Energy and Mineral Resources Ministry has confirmed plans to renegotiate all mining contracts including those wi ...
Friday, 23 September 11
ICMA TO BUILD UPGRADE FACILITIES TO ANTICIPATE BAN ON LOW-GRADE COAL EXPORT BY 2014
COALspot.com - January to August of this year, Indonesia’s coal production had already reached 235 million tons. Earlier estimates had targete ...
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- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Makarim & Taira - Indonesia
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- Planning Commission, India
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- SMG Consultants - Indonesia
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Indian Energy Exchange, India
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- GMR Energy Limited - India
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- London Commodity Brokers - England
- CIMB Investment Bank - Malaysia
- Parliament of New Zealand
- SMC Global Power, Philippines
- Central Electricity Authority - India
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- PTC India Limited - India
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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