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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, 26 July 11
UT'S SALES COULD REACH TO 8000 UNITS BY THE END OF 2011
COALspot.com - Sales of Komatsu heavy equipment in the domestic market in the first half of 2011 rose 59 percent to 4333 units compared to the same ...
Monday, 25 July 11
INDONESIA STATE ELECTRICITY COMPANY HAS BURNED 19 MMT OF COAL FOR FIRST HALF OF 2011
COALspot.com - Indonesia's State Electricity Company and other IPPs have burned 19 million tons of coal for first half of this year said,Pamudji Nu ...
Monday, 25 July 11
AKR CORPORINDO TO PRODUCE 0.3 MMT OF COAL BY DECEMBER
COALspot.com - PT AKR Corporindo (AKRA) began producing coal from its mine in Muara Teweh, Central Kalimantan. The company is targeting to pro ...
Sunday, 24 July 11
AN INDIAN PORT SETS A WORLD RECORD FOR CONVENTIONAL COAL DISCHARGE
COALspot.com - Krishnapatnam Port has set a World record for discharging 106,171 tons of steam coal in just 24 hrs using the conventional unloading sy ...
Saturday, 23 July 11
FAR EAST /SE ASIA ROUTE GAINED US$ 3000 HIGHER THAN LAST WEEK - VISTAAR
COALspot.com - The BDI further softened to by 2.22 pct and closed at 1323 points. The Cape and Panamax index also softened and closed at 1841 points ...
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- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Marubeni Corporation - India
- PTC India Limited - India
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Trasteel International SA, Italy
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- The State Trading Corporation of India Ltd
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- Coastal Gujarat Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- The University of Queensland
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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