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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, 19 May 11
OVERSUPPLY, VERY LARGE ORE CARRIERS EAT UP ON DRY BULK FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
After a brief upward momentum which ended early last week, the Baltic Dry Index, the dry bulk market’s benchmark has returned to its usual pat ...
Wednesday, 18 May 11
THE US COAL INDUSTRY LOGGED EXPORTS OF AROUND 25M TONNES IN 1Q OF 2011 - BRS
Another slow decline in the bulk markets this week, with the BCI losing the most at nearly 5%, the BPI 2.8% and the smaller sizes sub-1% amounts. Th ...
Wednesday, 18 May 11
AKR AIMS TO SELL COAL WORTH RP216 BILLION - PAPER
Bisnis Indonesia, an Indonesia's one of the leading business paper reported that, PT AKR Corporindo Tbk has targeted coal sales valued at Rp216 bil ...
Wednesday, 18 May 11
OVERHAUL OF MINING LAW MAY DETER INVESTMENT, S&P SAYS - THE JAKARTA GLOBE
The Jakarta Globe, an Indonesian English language news paper reported that, A report by Standard & Poor’s Ratings Services that a regulatory ...
Tuesday, 17 May 11
DRY BULK MARKET ENTERS WEEK ON WEAK MODE - HELLENIC SHIPPING
In yet another sign of softening freight rates for dry bulk carriers and oversupply issues, the dry bulk market entered this week on a downward path ...
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- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- MS Steel International - UAE
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- PTC India Limited - India
- White Energy Company Limited
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Planning Commission, India
- Port Waratah Coal Services - Australia
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Price Waterhouse Coopers - Russia
- Coalindo Energy - Indonesia
- Interocean Group of Companies - India
- Australian Coal Association
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Oldendorff Carriers - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- SMC Global Power, Philippines
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
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