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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, 02 June 11
LARGE SUPRAS FOR RBCT/INDIA ROUND ARE NOW ASKING 14K - FEARNBULK
Handy
The Handy/Supra market has in general been flat and un-exciting this week. The Black Sea market is almost non existing while the US Gulf mar ...
Thursday, 02 June 11
DRY BULK SHIP OWNERS LOOKING INTO SHORTENED WEEK WITH ANXIETY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With most markets in the western world closed yesterday, as a result of Memorial Day, dry bulk stakeholders weren’t able to build over the pos ...
Monday, 30 May 11
MIANG BESAR COAL TERMINAL ON TARGET
COALspot.com - MBCT, to be largest coal terminal in Asia to start construction in Indonesia’s east Kalimantan Island in July 2011 says Mr. Joh ...
Sunday, 29 May 11
THE FREIGHT MARKET CONTINUED TO GAIN MOMENTUM - VISTAAR
COALspot.com - The freight market continued to gain momentum and the BDI, Cape Index and Panamax was by up almost 10-12 pct and on all sectors, Vist ...
Saturday, 28 May 11
WCI-CHINA RATES SLIDED TO 15K AND FROM ECI AROUND 12K - FEARNLEYS AS
Handy
Rates in the Atlantic remain steady/flat with the Black Sea remaining quiet with little fresh enquiries. The Continent is seeing more tonnag ...
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- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Planning Commission, India
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- Eastern Coal Council - USA
- White Energy Company Limited
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- London Commodity Brokers - England
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- The University of Queensland
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mintek Dendrill Indonesia
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Ind-Barath Power Infra Limited - India
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- McConnell Dowell - Australia
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Videocon Industries ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Borneo Indobara - Indonesia
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
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