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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, 30 April 11
THE PANAMAX WAS THE BIGGEST GAINER
COALspot.com - The freight market appeared to recover slightly after the Easter holidays. However they market may not move up much and likely to mai ...
Friday, 29 April 11
KOMIPO ISSUES TENDER FOR 710,000 MT OF LCV & HCV COAL
COALspot.com - Korea Midland Power Co. Ltd (KOMIPO) has issued a spot supply tender for supply of total 710,000 MT of thermal coal for delivery betw ...
Friday, 29 April 11
HARUM EYES IDR 2.58 TRILLION COAL TAKEOVER
PT Harum Energy Tbk (HRUM), that is controlled by Indonesian tycoon Kiki Barki, is poised to spend Rp 2.58 trillion (approximately US$ 301.296 mln) ...
Friday, 29 April 11
CHINA'S IMPORTS 27 PERCENT LESS COAL IN Q1 2011 - ICAP SHIPPING
ICAP Shipping reported that, China's coal imports in the first quarter were some 27% down on a year ago at 32.3 Mt (2010: 44.4 Mt). Part of the rea ...
Thursday, 28 April 11
BALTIC DRY INDEX NUDGES UP AFTER DAYS OF LOSSES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
After consecutive falls, the dry bulk freight market, as followed through the Baltic Dry Index, finally caught a breather yesterday, with the BDI ma ...
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- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- VISA Power Limited - India
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- Posco Energy - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- Indonesian Coal Mining Association
- Australian Coal Association
- ICICI Bank Limited - India
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- Meenaskhi Energy Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Simpson Spence & Young - Indonesia
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- Mercuria Energy - Indonesia
- The University of Queensland
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- Marubeni Corporation - India
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- London Commodity Brokers - England
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Larsen & Toubro Limited - India
- Port Waratah Coal Services - Australia
- SN Aboitiz Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
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