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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, 05 May 11
AKR NAMES KARUNIA AS COAL CONTRACTOR
Insider Stories reported that, PT AKR Corporindo Tbk has appointed PT Karunia Bumi Khatulistiwa as the contractor of coal mining concession in North ...
Tuesday, 03 May 11
DRY BULK MARKET OUTLOOK SEEN WEAK, AS SHIP OWNERS PILE UP MORE SHIPS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the Baltic Dry Index not trading yesterday, it’s worth taking a step back to see the current freight levels. First of all, capesizes and ...
Tuesday, 03 May 11
THE HANDY MARKET CONTINUED TO SLIDE DOWN - BRS
There were marginal increases in rates for the larger sizes this week, with the Cape index remaining stable and the Panamax index logging a 5% incre ...
Monday, 02 May 11
ADARO POSTS 11.7 PERCENT INCREASE IN REVENUES ON HIGHER PRICES - THE JAKARTA POST
The Jakarta Post reported that, Indonesia’s second-largest coal producer, PT Adaro Energy Tbk, announced an 11.7 percent increase in net reven ...
Saturday, 30 April 11
BUKIT ASAM PROFIT HAS JUMPS 108 PERCENT IN Q1, 2011
The Indonesian state-controlled coal miner PT Bukit Asam Tbk (PTBA) reported a 108.07 percent jump in net profit during the first three months of 20 ...
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- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meenaskhi Energy Private Limited - India
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Coalindo Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- Kartika Selabumi Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Australian Coal Association
- Parliament of New Zealand
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- Latin American Coal - Colombia
- Savvy Resources Ltd - HongKong
- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Meralco Power Generation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- Port Waratah Coal Services - Australia
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Bhatia International Limited - India
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Carbofer General Trading SA - India
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Merrill Lynch Commodities Europe
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
- PTC India Limited - India
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Posco Energy - South Korea
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- LBH Netherlands Bv - Netherlands
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- Bayan Resources Tbk. - Indonesia
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Therma Luzon, Inc, Philippines
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