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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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Monday, 16 May 11
INDO TAMBANG 1Q SALES REVENUE UP - INSIDER STORIES
Thai Banpu Plc last week reported a 7.83% increase in coal sales revenue from its Indonesian operating unit via PT Indo Tambangraya Megah Tbk (ITMG) ...
Sunday, 15 May 11
THE FREIGHT MARKET REMAINED SOFT - VISTAAR
COALspot.com - "The freight market overall remained soft", said Capt. Reddy, Director of Vistaar Shipping Singapore. He further added, &qu ...
Saturday, 14 May 11
WELSPUN TO ACQUIRE AN INDONESIAN COAL MINE - MEDIA
The India based Welspun Power and Steel Ltd is planning to acquire 456,000 shares in PT Batubara Energy Indonesia, representing 75% interest, accord ...
Saturday, 14 May 11
DRY BULK MARKET ON A DOWNFALL ONCE AGAIN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In what is now pretty clear will be yet another challenging year for dry bulk ship owners, the Baltic Dry Index returned to its usual pattern of dec ...
Tuesday, 10 May 11
DRY BULK MARKET KEEPS ON RISING, OUTLOOK MIXED - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market inched forward once again on Monday, with the Baltic Dry Index rising by 0.6% to 1,348, although the Capesize market was 0.57% l ...
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- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Ministry of Finance - Indonesia
- White Energy Company Limited
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Price Waterhouse Coopers - Russia
- Petron Corporation, Philippines
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Banpu Public Company Limited - Thailand
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Binh Thuan Hamico - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- SMC Global Power, Philippines
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
- Makarim & Taira - Indonesia
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- Singapore Mercantile Exchange
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Independent Power Producers Association of India
- The University of Queensland
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
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