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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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Sunday, 10 July 11
DRY BULK MARKET SHOWING SIGNS OF IMPROVEMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Stronger Capesize demand has helped propel the dry bulk market forward this week, with the Baltic Dry Index (BDI) ending yesterday’s session u ...
Sunday, 10 July 11
INDONESIAN BAYAN RESOURCES TO SUPPLY 100 MILLION TONS OF COAL TO INDIAN UNIVERSAL SUCCESS ENTERPRISES LIMITED
Coal miner PT Bayan Resources Tbk (BYAN), that is owned by Dato' Low Tuck Kwong, has entered into a conditional sales and purchase agreement to sup ...
Thursday, 07 July 11
BELOW 5100 COAL WILL BE BANNED FOR EXPORT BY 12 JANUARY 2014
COALspot.com - Indonesian government is in the process of drafting an amendment for government regulation 23/ 2010.
GR 23/2010 has issued to sup ...
Wednesday, 06 July 11
ATLAS RESOURCES TO OFFLOAD 17 PERCENT IPO - INSIDER STORIES
Coking and thermal coal miner PT Atlas Energi Resources aims to offload 17percent new shares of its enlarged capital after Eid-Fitri holidays, as qu ...
Tuesday, 05 July 11
UNTR REVISES UP SALES TO 7,500 UNITS - INSIDER STORIES
PT United Tractors Tbk (UNTR), distributor of Komatsu heavy equipment and parent of PT Pamapersada Nusantara, has revised up its equipment sales tar ...
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- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- ICICI Bank Limited - India
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Xindia Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- White Energy Company Limited
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Sidhee Cement - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- New Zealand Coal & Carbon
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Planning Commission, India
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- The Treasury - Australian Government
- Bhushan Steel Limited - India
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
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