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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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Thursday, 08 September 11
PETROSEA ADDS US$730 MIO CONTRACT
Coal mining contractor PT Petrosea Tbk (PTRO), a majority owned subsidiary of energy integrated company PT Indika Energy Tbk (INDY), has secured a U ...
Wednesday, 07 September 11
ANOTHER EXCEPTIONALLY STRONG WEEK FOR THE CAPESIZE MARKET - BRS
The very strong rise in Cape rates pushed through an overall improvement in the BDI this week, although relatively little benefit from the Capes has ...
Wednesday, 07 September 11
INDIA HIT BY INDONESIAS COAL PRICE - TEMPO INTERACTIVE
TEMPO Interactive, an Indonesian online news portal reported that, The Indian government has complained about the price increase of Indonesian coal, ...
Wednesday, 07 September 11
SAMPUR POWER AGREEMENT SIGNED - DAILY NEWS
Daily News, Sri Lank's national news paper reported that, the agreement for the setting up of a 500 MW coal-fired power plant at Sampur, Trincomale ...
Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohm ...
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- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Formosa Plastics Group - Taiwan
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- Parliament of New Zealand
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Central Electricity Authority - India
- Minerals Council of Australia
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Indian Oil Corporation Limited
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Finance - Indonesia
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- GN Power Mariveles Coal Plant, Philippines
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Siam City Cement - Thailand
- Australian Coal Association
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
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