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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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Wednesday, 27 April 11
KEWESPO CALLS FOR 765KT OF THERMAL COAL
COALspot.com - South Korea's East-West Power Co's (KEWESPO) has issued a tender to buy total 765,000 tonnes of thermal coal for delivery between J ...
Wednesday, 27 April 11
HARUM ENERGY TO PAY RP 659.1B IN DIVIDENDS - THE JAKARTA POST
The Jakarta Post reported that, Indonesian coal miner Harum Energy is planning to pay out Rp 659.1 billion (US$76.46 million) in dividends this year ...
Wednesday, 27 April 11
TSIS $5 MILLION PLANT TO START PRODUCING UPGRADED COAL - THE JAKARTA POST
The Jakartapost reported that, PT Total Sinergy International (TSI), in association with Agritrade Resources Limited of Hong Kong, will upgrade its ...
Wednesday, 27 April 11
RAIN CONSIDERS COAL MINES TAKEOVER - INSIDER STORIES
Indonesian's tenth largest coal miner in term of coal concession, PT Resource Alam Indonesia Tbk (KKGI), is considering to acquire several coalmine ...
Wednesday, 27 April 11
DRY BULK MARKET LACKS ACTIVITY, RATES KEEP RETREATING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the Easter Holidays for a large of the world now behind, the dry bulk market kept lacking activity on Tuesday, which led the Baltic Dry Index ( ...
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- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Economic Council, Georgia
- Kaltim Prima Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Ministry of Transport, Egypt
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Bhatia International Limited - India
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Sakthi Sugars Limited - India
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Australian Coal Association
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- The University of Queensland
- The Treasury - Australian Government
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- Star Paper Mills Limited - India
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- Rio Tinto Coal - Australia
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- White Energy Company Limited
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
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