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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, 07 May 11
SUPRAMAXES ARE AT AROUND $ 13,500-14,000 PER DAY FOR SINGLE TRIPS
COALspot.com - The freight remained fairly steady this week with the BDI up by 71 points and closing at 1,340 points, said Capt. Reddy, the director ...
Saturday, 07 May 11
COAL PRODUCTION MAY REACH 95M TONS IN SECOND QUARTER - THE JAKARTA POST
The Jakarta Post reported that, Indonesian miners are projected to produce around 95 million tons of coal in the second quarter of this year after l ...
Friday, 06 May 11
BUKIT ASAM TO CLOSE COAL TAKEOVER IN Q2 - INSIDER STORIES
The state-controlled PT Tambang Bukit Asam Tbk (PTBA) expects to complete acquisition of two coal mining companies from four companies which is now ...
Thursday, 05 May 11
SUPRAS IN NORTH CHINA ARE GETTING CLOSE TO $ 13K FOR INDO-INDIA
Handy
The Atlantic market is stable/flat with positive undertone meaning more enquiries hitting the market today. Lack of prompt vessels. Trips to ...
Thursday, 05 May 11
PANAMAXES LEAD DRY BULK MARKET TO HIGHER GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s benchmark, the Baltic Dry Index (BDI) managed to edge higher yesterday, rising by 1.81% to 1,292 points, in the first po ...
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- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- The University of Queensland
- Aditya Birla Group - India
- Planning Commission, India
- GMR Energy Limited - India
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Ministry of Mines - Canada
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Chettinad Cement Corporation Ltd - India
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Trasteel International SA, Italy
- Central Electricity Authority - India
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Transport, Egypt
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Bharathi Cement Corporation - India
- Karaikal Port Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
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