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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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Wednesday, 29 June 11
ANOTHER STRONG PERFORMANCE BY CAPESIZE - BRS
Another strong performance by the Capesize market this week, bringing the BCI up 8% to 1,974 points. However the Panamax market was penalised, losin ...
Monday, 27 June 11
THE IRON ORE IMPORTS BY CHINA SEEMED TO SLOW DOWN - VISTAAR
COALspot.com - The BDI was holding as previous week and was just up by 1 point and closed at 1424 points end of last week. The biggest gain was ...
Friday, 24 June 11
THE INDONESIAN GOVERNMENT WILL NOT EXTEND ALL EXPIRED MINING CONTRACTS - JAKARTA UPDATES
The Indonesian Government have decided not to extend all mining concessions under the scheme called Contract of Work and instead will take over the ...
Friday, 24 June 11
BERAU EYEING 70 PERCENT GROWTH IN EBITDA
Indonesia's coal producer PT Berau Coal Energy Tbk (BRAU) is eyeing a 60 -70 percent growth in EBITDA to US$ 560 million-US$595 million this year. ...
Thursday, 23 June 11
DRY BULK MARKET KEEPS EXHIBITING SIGNS OF WEAKNESS THIS WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market seems to be unable to climb at new highs this week, showing signs of weakness, across most ship types. Yesterday, the Baltic Dry ...
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Showing 5211 to 5215 news of total 6871 |
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- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Africa Commodities Group - South Africa
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- PTC India Limited - India
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Energy Development Corp, Philippines
- The University of Queensland
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- PetroVietnam Power Coal Import and Supply Company
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
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