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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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Thursday, 14 July 11
INDO GOVT. SETS JULY COAL REFERENCE PRICE AT US$ 118.24 PER TON
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia sets coal spot price benchmark for July 2011 at US$ 118.24 per ton, US$ 0 ...
Thursday, 14 July 11
DRY BULK MARKET KEEPS FALLING ON WEAK CAPESIZE SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept on retreating on Wednesday, with the Baltic Dry Index (BDI) falling to 1,383 points, from 1,411 of the previous day. Capesi ...
Thursday, 14 July 11
UNITED TRACTORS BUYS DUTA SEJAHTERA - INSIDER STORIES
Insider Stories reported that, PT United Tractors Tbk (UNTR), via a wholly-owned subsidiary PT Tuah Turangga Agung, will acquire PT Duta Sejahtera a ...
Wednesday, 13 July 11
ANOTHER FIRMER WEEK FOR THE CAPES - BRS
Barry Rogliano Salles reported that, there were mixed results for the dry bulk market this week: the Capesize and Panamax markets performed well gai ...
Tuesday, 12 July 11
INDONESIAN MINERS PLAN $70M INVESTMENT TO UPGRADE QUALITY OF COAL - THE JAKARTA GLOBE
One of the leading english language news paper in indonesia, the Jakarta globe reported that, as the government implements a ban on the export of po ...
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- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Marubeni Corporation - India
- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Australian Coal Association
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- VISA Power Limited - India
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- The University of Queensland
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- PTC India Limited - India
- Sical Logistics Limited - India
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- The Treasury - Australian Government
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- Independent Power Producers Association of India
- White Energy Company Limited
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Kideco Jaya Agung - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
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