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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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Monday, 22 August 11
MACRO ECONOMICS - PETER SAND BIMCO / HELLENIC SHIPPING
The US is jeopardising the global recovery as job creation remains top challenge across the board.
Global economy: While growth in most emerging ...
Sunday, 21 August 11
SUPRAMAX AVAILABILITY WAS TIGHT DUE TO UPCOMING RAMADAN HOLIDAYS
COALspot.com - The financial markets have been in turmoil with all major stock exchanges down and uncertainty prevails. However the shipping market ...
Sunday, 21 August 11
TUAH TURANGGA ACQUIRES DUTA NURCAHYA
Coal miner PT Tuah Turangga Agung, a wholly owned subsidiary of PT United Tractors Tbk (UNTR) via PT Pamapersada Nusantara), has agreed to acquire 6 ...
Friday, 19 August 11
INDIAS CICTL HAS ACHIEVED ONE MILLION TONS OF DISCHARGE
COALspot.com - Chettinad International Coal Terminal (CICTL) in Ennore port, a state of the art mechanized coal terminal, which was inaugurated on 28t ...
Friday, 19 August 11
AUSTRALIAS' ATH TO ACQUIRE 60% OF APUAH COAL MINE IN INDONESIA
COALspot.com - Australian listed company, Atech Holdings Limited (ATH) has entered into a conditional binding term sheet to acquire 60 percent stake ...
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- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Central Java Power - Indonesia
- VISA Power Limited - India
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- The University of Queensland
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Electricity Authority, New Zealand
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Manunggal Multi Energi - Indonesia
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Central Electricity Authority - India
- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
- Parry Sugars Refinery, India
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Global Green Power PLC Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Makmur.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Marubeni Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Makarim & Taira - Indonesia
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- LBH Netherlands Bv - Netherlands
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Energy Link Ltd, New Zealand
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
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