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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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Friday, 09 September 11
SUPRA BARA SECURES $20 MILLION LOAN - JP
The Jakarta Post reported that, Coal miner PT Supra Bara Energi says it has secured a US$20 million loan facility from BNP Paribas to buy heavy equi ...
Friday, 09 September 11
CAPESIZE CAN SECURE USD 17-18K SHORT PERIOD - FEARNBULK
Handy
The US Gulf has remained relatively steady, slightly more activity in the South Atlantic with owners aiming for low to mid USD 20k´s f ...
Thursday, 08 September 11
UKRAINES COAL PRODUCTION TO RISE 8% - IFANDP
Industrial fuels & power reported that, Ukraine will increase its coal output by about 8% this year compared to last year, said the country&rsqu ...
Thursday, 08 September 11
DRY BULK MARKETS RALLY COMES TO AN END - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was widely expected by analysts and shipbrokers alike, the latest rally of the dry bulk market came to a halt yesterday, with the Baltic Dry Inde ...
Thursday, 08 September 11
TRADA MARITIME BUYS GUNUNG BARA UTAMA
Insider Stories reported that, PT Trada Maritime Tbk (TRAM) has purchased convertible bonds issued by PT Awesome Coal from Zakia Limited. The memora ...
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- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Australian Coal Association
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Sarangani Energy Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Bayan Resources Tbk. - Indonesia
- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Planning Commission, India
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- White Energy Company Limited
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Simpson Spence & Young - Indonesia
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Minerals Council of Australia
- MS Steel International - UAE
- Bhatia International Limited - India
- Economic Council, Georgia
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Star Paper Mills Limited - India
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
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