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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, 23 August 11
PENRHYN COAL USING EVERGREEN ENERGYS COAL UPGRADING PROCESS
Evergreen Energy Inc has announced the successful testing results of the initial batches of Penrhyn coal using Evergreen Energy’s coal upgradi ...
Tuesday, 23 August 11
A SHARP INCREASE IN THE BDI - BRS
A sharp increase in the BDI this week, driven by the rise in Capesize rates. Overall the BDI was up 13.5% to 1,462 points on the back of a 20% surge ...
Monday, 22 August 11
INDONESIA TO BAN BELOW 5700 KCAL/KG COAL FOR EXPORT
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia is in the process of drafting a regulation which is requiring mine owners ...
Monday, 22 August 11
JATENERGY AGREED TO FORM JV WITH AN INDONESIAN COAL MINING COMPANY
COALspot.com - Australian’s listed company, Jatenergy Limited has entered conditional agreement to form joint venture with Indonesia’s c ...
Monday, 22 August 11
NTPC TO IMPORT 16 MILLION TON OF COAL TO BRIDGE THE GAP
COALspot.com - NTPC to import 16 million tons of imported coal, which is equivalent to 23-24 million tons of Indian coal to bridge the gap.
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- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Parliament of New Zealand
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- Medco Energi Mining Internasional
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Economic Council, Georgia
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining Corp, Philippines
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- White Energy Company Limited
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Georgia Ports Authority, United States
- Krishnapatnam Port Company Ltd. - India
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Indogreen Group - Indonesia
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
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