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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, 12 July 11
DRY BULK MARKET BEGINS WEEK ON RETREAT MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was evident by the end of the previous week, the dry bulk market’s growth momentum was about to lose steam, something proven yesterday, whe ...
Monday, 11 July 11
REFLECTIONS ON THE FLEET REACHING ONE BILLION TONNES - CLARKSONS / HELLENIC SHIPPING
“A billion gross tonnes of shipping” has a nice ring to it. It presents the industry as a business of substance, with its 85,000 ships w ...
Sunday, 10 July 11
UNTR PROVIDES US$100 MIO TO TTA - INSIDER STORIES
PT United Tractors Tbk (UNTR) agreed to allocate US$100 million to its coal subsidiary dubbed PT Tuah Turangga Agung (TTA).The US$100 million was pa ...
Sunday, 10 July 11
HARDLY ANY CARGO FROM WC INDIA UNTIL END OF MONSOONS - VISTAAR
COALspot.com - The BDI continued to hold last week and firmed up by 27 points with cape and panama index supporting the BDI.
The BDI closed at 1, ...
Sunday, 10 July 11
PTBA INCREASES SHARES IN COAL TRAIN PROJECT - TEMPO INTERACTIVE
TEMPO Interactive reported that, PT Tambang Batubara Bukit Asam (PTBA) is still studying the plan to buy 20 percent of shares in the PT Bukit Asam T ...
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- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- GAC Shipping (India) Pvt Ltd
- PTC India Limited - India
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Thai Mozambique Logistica
- Australian Coal Association
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Bayan Resources Tbk. - Indonesia
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Krishnapatnam Port Company Ltd. - India
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- The State Trading Corporation of India Ltd
- Coalindo Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- Maharashtra Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- Minerals Council of Australia
- Metalloyd Limited - United Kingdom
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- VISA Power Limited - India
- Electricity Authority, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Bharathi Cement Corporation - India
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- GMR Energy Limited - India
- MS Steel International - UAE
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
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