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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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Wednesday, 17 August 11
BUMI'S H1 UNDERLYING OPERATING PROFIT $62 MILLION
COALspot.com - Bumi PLC , posted underlying first-half operating profit of $62 million and production at PT Bumi Resources and PT Berau increased to ...
Wednesday, 17 August 11
SHIP OWNERS COULD FACE PAIN ON THE BACK OF GLOOMY ECONOMYS PREDICTIONS - HELLENIC SHIPPING
The latest market turmoil, coupled with the renewed risk of a global recession could very well signal more troubled times for ship owners of all shi ...
Tuesday, 16 August 11
CHALLENGER ENTERED INTO CSPA WITH PELANGI KERTANEGARA TO ACQUIRE 100% STAKE
COALspot.com - Challenger Deep Resources Corp., through its wholly owned subsidiary, P.T. Bestindo Energy, has exercised its option to purchase an a ...
Monday, 15 August 11
ADARO ENERGYS NET INCOME MORE THAN DOUBLES IN FIRST HALF 2011
COALspot.com - Indonesian’s second largest coal producer, Adaro Energy, booked net profit US$ 268 million in the first half 2011, rose two-fol ...
Monday, 15 August 11
INDIAS MALABAR CEMENTS SEEK TO IMPORT 40,000 TONS OF COAL
COALspot.com - Malabar Cements Ltd., India's Keralaa government owned cement factory is seeking to import 40K metric tons of non-coking coal throug ...
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- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- Bayan Resources Tbk. - Indonesia
- Aboitiz Power Corporation - Philippines
- Australian Coal Association
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- White Energy Company Limited
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- Bhoruka Overseas - Indonesia
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Iligan Light & Power Inc, Philippines
- The University of Queensland
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Central Electricity Authority - India
- Minerals Council of Australia
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- Thai Mozambique Logistica
- ASAPP Information Group - India
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Coalindo Energy - Indonesia
- Jaiprakash Power Ventures ltd
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