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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, 09 August 11
DRY BULK MARKET UNABLE TO FIND UPWARD MOMENTUM, SLUMPS AGAIN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
They same that what goes up must come down and nobody seems to have found a better application of this expression, than the beleguered dry bulk mark ...
Monday, 08 August 11
OIL PRICES ARE SOFTENING, WILL IT INFLUENCE COAL PRICES?
COALspot.com - The current global economic condition is in volatility after a little chance of optimism for economic recovery.
Oil price at ...
Monday, 08 August 11
A SUPRAMAX VESSEL WAS REPORTED FIXED AT $ 12K - VISTAAR
COALspot.com - The BDI was slightly up by about 4 points closed at 1268 points which was supported by cape index which was up 3.14 pct and closed at ...
Saturday, 06 August 11
NTPC IS CONSIDERING TO ENTER INTO 25 YEARS COAL PURCHASE AGREEMENT
Indian, State-run power producer NTPC's present annual consumption is 164 million tonnes, and company is considering long-term agreements abroad to ...
Friday, 05 August 11
RIO TINTO SIGNS MOU WITH JINDAL STEEL AND POWER ON ADVANCING HISMELT TECHNOLOGY
Press Release - Rio Tinto has signed a Memorandum of Understanding (MoU) with Jindal Steel and Power Limited (JSPL) to take the next step in g ...
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- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Antam Resourcindo - Indonesia
- Makarim & Taira - Indonesia
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- PTC India Limited - India
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- The Treasury - Australian Government
- Alfred C Toepfer International GmbH - Germany
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Dalmia Cement Bharat India
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Grasim Industreis Ltd - India
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- Central Java Power - Indonesia
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- Savvy Resources Ltd - HongKong
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Price Waterhouse Coopers - Russia
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- Edison Trading Spa - Italy
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Kobexindo Tractors - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Salva Resources Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- Malabar Cements Ltd - India
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