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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, 25 August 11
OPG EXPECTS COAL PRICES TO REMAIN FIRM IN THE SHORT TERM
COALspot.com - Revenue of OPG, the developer and operator of Group Captive power plants in India up 188% to £33.15m and Income from continuing ...
Thursday, 25 August 11
PAITON POWER LOOKING FOR 3.96 MILLION TONS OF COAL
COALspot.com - PT Pembangkit Jawa Bali (PJB) is looking for 3.96 million tons coal with calorific value 4,800 kcal/kg on as received basis. Accordin ...
Tuesday, 23 August 11
ICMA CALLS GOVERNMENT TO REVIEW EXPORT BAN REGULATION
COALspot.com - Chairman of the Indonesian Coal Mining Association (ICMA) Bob Kamandanu asks the government to review the regulation that being draft ...
Tuesday, 23 August 11
ADARO ENERGY ACQUIRES 75% STAKE OF PT MUSTIKA INDAH PERMAI FOR US$ 222.5 MILLION
COALspot.com - PT Alam Tri Abadi, a wholly owned subsidiary of PT Adaro Energy Tbk, signed a share purchase agreement to acquire a 75% stake of PT M ...
Tuesday, 23 August 11
COAL DEMAND IS REMAINED STRONG IN SPITE OF CURRENT GLOBAL ECONOMIC UNCERTAINTY - BUMI
COALspot.com - Indonesia's largest coal producer, PT Bumi Resources, Tbk (BUMI)'s sales revenue has increased to US$1.79 billion (compared with US ...
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- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- London Commodity Brokers - England
- PTC India Limited - India
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Bank of Tokyo Mitsubishi UFJ Ltd
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Bhushan Steel Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Parry Sugars Refinery, India
- Bulk Trading Sa - Switzerland
- The University of Queensland
- South Luzon Thermal Energy Corporation
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Australian Coal Association
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Central Java Power - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- Globalindo Alam Lestari - Indonesia
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- Indika Energy - Indonesia
- Sakthi Sugars Limited - India
- Planning Commission, India
- Wilmar Investment Holdings
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- Energy Link Ltd, New Zealand
- Edison Trading Spa - Italy
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Cement Manufacturers Association - India
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- Chettinad Cement Corporation Ltd - India
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