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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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Saturday, 28 May 11
GOLDEN MINES IPO AT RP 2,300 - RP 3,500
Coal miner PT Golden Energy Mines, a wholly owned subsidiary of PT Dian Swastatika Sentosa Tbk (DSSA) which is controlled by Indonesian businessman ...
Friday, 27 May 11
LARGER DRY BULK CARRIERS LEAD BDIS RALLY THIS WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Larger dry bulk vessels have kept on leading the market’s rise this week, with the BDI (Baltic Dry Index) rising by a more than healthy 3.43% ...
Wednesday, 25 May 11
70 PERCENT OF HARUMS PRODUCTION SOLD - BISNIS INDONESIA
Coal producer PT Harum Energy Tbk claimed that out of this year's total production target of 10 million tons, 70% or 7 million tons had been sold, ...
Wednesday, 25 May 11
MINERS BACK GOVT PLAN TO FREEZE MINING PERMITS - THE JAKARTA POST
Indonesian coal miners hailed the government’s decision to impose a moratorium on the issuance of new mining permits, saying the freeze would ...
Wednesday, 25 May 11
DRY BULK MARKET ENTERS WEEK ON A HIGH NOTE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has managed to end its downward trend of the past few weeks and surge back on higher ground. Yesterday, the Baltic Dry Index (BD ...
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- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Siam City Cement - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- The Treasury - Australian Government
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Vizag Seaport Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Latin American Coal - Colombia
- Africa Commodities Group - South Africa
- Antam Resourcindo - Indonesia
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- VISA Power Limited - India
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Australian Coal Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- White Energy Company Limited
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- CNBM International Corporation - China
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Aboitiz Power Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- Manunggal Multi Energi - Indonesia
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Kideco Jaya Agung - Indonesia
- Bayan Resources Tbk. - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Kartika Selabumi Mining - Indonesia
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