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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, 02 August 11
INDONESIA BECOMES SECOND LARGEST COKING COAL EXPORTER
COALspot.com - Indonesia, the largest thermal coal exporter in the world now becomes second biggest coking coal exporter to Japan. Indonesian’ ...
Tuesday, 02 August 11
5TH ASIA PACIFIC COAL TRADING & INVESTMENT OUTLOOK TO PRESENT LATEST TRENDS
Press Release - Global commodities prices have been staying high since the beginning of 2011, resulting in the “TENSION” in various coun ...
Tuesday, 02 August 11
REALM RESOURCES TO ACQUIRE A 75% INTEREST IN THE KATINGAN RIA COAL PROJECT
COALspot.com - Scoping study at the Katingan Ria Coal Project, Central Kalimantan demonstrates positive technical and financial potential for the pr ...
Tuesday, 02 August 11
COAL INDIA TO INVEST IN GOLDEN ENERGY MINES
COALspot.com - Golden Energy Mines, part of PT Dian Swastatika Sentosa Tbk’s, is still negotiating with several strategic investors to o ...
Sunday, 31 July 11
CAPES ARE TRADING BELOW $ 9500 PER DAY - VISTAAR
COALspot.com - The BDI further softened by 4.46 pct and closed at 1264 points which touched below 1300 points after long time. The Cape and Panamax ...
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- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Energy Link Ltd, New Zealand
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Planning Commission, India
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- San Jose City I Power Corp, Philippines
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- Kaltim Prima Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Parry Sugars Refinery, India
- Interocean Group of Companies - India
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- Minerals Council of Australia
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Meralco Power Generation, Philippines
- Heidelberg Cement - Germany
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Parliament of New Zealand
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Semirara Mining Corp, Philippines
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- MS Steel International - UAE
- SMG Consultants - Indonesia
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Mercator Lines Limited - India
- Chettinad Cement Corporation Ltd - India
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
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