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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, 17 September 11
GVK ACQUIRES HANCOCK COAL AND INFRASTRUCTURE FOR US$ 1.26 BILLION
COALspot.com - GVK group, India’s leading infrastructure developer,confirmed arrangements for the acquisition of a strategic part of large, hi ...
Saturday, 17 September 11
INDIA'S GVK ACQUIRES HANCOCK COAL AND INFRASTRUCTURE PROJECTS IN AUSTRALIA
COALspot.com - GVK group, India’s leading infrastructure developer, today confirmed arrangements for the acquisition of a strategic part of la ...
Friday, 16 September 11
DELTA DUNIA MAKMUR REMOVED 30.9 MILLION BCM OVERBURDEN IN AUGUST 2011
COALspot.com - PT. Delta Dunia Makmur Tbk has removed 30.9 million bcm (+13.2% YoY) overburden in August 2011 while coal production was at 2.9 ...
Thursday, 15 September 11
RUSSIAN COAL EXPORTS UP 10.9% IN JAN-AUG TO 71.50 MILLION TONS - PORT NEWS / HELLENIC SHIPPING
Port News reported that, Coal exports from Russia in January-August 2011 grew by 10.9% compared with the same period last year, to 71.50 million ton ...
Thursday, 15 September 11
INDIAN GOVT PLANS TO DEVELOP 9 NEW MAJOR PORTS BY 2016 - INVEST MONEY / HELLENIC SHIPPING
The government has announced to make a investment of more than Rs 22,000 crore (approximately US$ 4,623,791,331) to develop nine new major ...
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- Vedanta Resources Plc - India
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- PNOC Exploration Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Eastern Coal Council - USA
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- Australian Coal Association
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- Aditya Birla Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- The University of Queensland
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- Mjunction Services Limited - India
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