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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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Tuesday, 26 April 11
NTPC CALLS TENDER FOR 4 MLN TON OF NON-COKING COAL
COALspot.com - NTPC Limited, incorporated in 1975 as a public sector company wholly owned by Government of India, is the largest thermal power gener ...
Monday, 25 April 11
THE FUTURES FOR THREE YEARS WAS AT AROUND PANAMAX/US$ 14,000 PER DAY & SUPRAMAX/US$ 14,000 PER DAY - VISTAAR
COALspot.com - The freight market continued to soften further with all segments down except for the handy size which was marginally up by 10 points. ...
Saturday, 23 April 11
GUPTA COAL TO BAG ONE MILLION TONS OF COAL SUPPLY ORDER FROM KPCL AT AROUND US$ 127.53 PMT
COALspot.com - Karnataka Power Corporation (KPCL), a state utility of Karnataka, India has secured its one million tons of thermal coal with c ...
Saturday, 23 April 11
STRAITS ASIA SETS 11.5 MIO TONS OUTPUT - INSIDER STORIES
Insider Stories reported that, Singapore-listed Straits Asia Resources Limited plans to jack up its coal output target of 8.5% to 11.5 million tons ...
Friday, 22 April 11
DRY BULK MARKET KEEPS FALLING, NOW AT TWO-MONTH LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market seems unable at the moment to recover from the weight of newbuilding deliveries, resulting in too many ships competing for fewer ...
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- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Bulk Trading Sa - Switzerland
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Kaltim Prima Coal - Indonesia
- India Bulls Power Limited - India
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Indonesian Coal Mining Association
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Planning Commission, India
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Interocean Group of Companies - India
- Straits Asia Resources Limited - Singapore
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- SMC Global Power, Philippines
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- Parliament of New Zealand
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Bangladesh Power Developement Board
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- PTC India Limited - India
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- Economic Council, Georgia
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Krishnapatnam Port Company Ltd. - India
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
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