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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, 09 June 11
INDIKA AIMS TO PRODUCE 31 MILLION TONS OF COAL IN 2011 - THE JAKARTA POST
The Jakarta Post, a leading English news paper in Indonesia reported that, PT Indika Energy Tbk, an integrated energy company, is targeting to incre ...
Wednesday, 08 June 11
BAYAN TO DISTRIBUTE RP. 80 ( APPROX. US$ 0.00939850) PER SHARE DIVIDEND
Coal miner PT Bayan Resources Tbk (BYAN), that is controlled by business Dato' Low Tuck Kwong, will distribute Rp80 a share dividend or Rp266.7 bil ...
Wednesday, 08 June 11
CBM PRODUCTION FROM AUSTRALIA, CHINA, INDIA, AND INDONESIA IS EXPECTED TO WITNESS A SIGNIFICANT INCREASE BY 2015
Press Release - According to Global Data (December 2010), CBM production in Australia, China, India, and Indonesia is expected to witness a signific ...
Sunday, 05 June 11
COAL IMPORTS BY CHINA IS LIKELY TO INCREASE - VISTAAR SINGAPORE
COALspot.com - The freight market softened this week except for the BDI and Cape index was up, but even in these sectors the momentum was compared t ...
Friday, 03 June 11
DRY BULK MARKETS RESURGENCE APPEARS TO BE LOSING SOME STEAM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s seems to be losing some steam, despite reports of growing Chinese demand for commodities, especially coal, on the back o ...
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- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Lanco Infratech Ltd - India
- The University of Queensland
- Jindal Steel & Power Ltd - India
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- LBH Netherlands Bv - Netherlands
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Australian Coal Association
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Sical Logistics Limited - India
- Kartika Selabumi Mining - Indonesia
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- IHS Mccloskey Coal Group - USA
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Eastern Energy - Thailand
- PTC India Limited - India
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
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