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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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Friday, 27 January 12
DEMOLITION ACTIVITY NEEDS TO INCREASE SIGNIFICANTLY THIS YEAR AS WELL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The oversupply of vessels in most shipping sectors is so intense that it’s become clear to ship owners that unless they scrap as many of their ...
Thursday, 26 January 12
ABM INVESTAMA SEALS US$100 MIO CONTRACT - INSIDER STORIES
Insider Stories reported that, PT Reswara Minergi Hartama, a subsidary of PT ABM Investama Tbk (ABMM), has sealed a 2 million tons of coal export co ...
Thursday, 26 January 12
DRY BULK MARKETS DOWNFALL KNOWS NO LIMITS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s demise seems to have no visible end, as China’s Lunar Year Holidays continue this week, thus leaving demand with n ...
Wednesday, 25 January 12
CLEAN AND CLEAR MINING PERMITS TO BE COMPLETED END OF 2012 - BISNIS.COM
Bisnis.com reported that, the government plans to announce 700 mining permits with "clean and clear" status without overlapping on other p ...
Tuesday, 24 January 12
ANOTHER SEVERE DROP IN THE CAPESIZE - BRS
The lunar year celebrations and the high number of new building deliveries (more than 35 Capes so far in January as owners push 2011 deliveries into ...
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- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- Semirara Mining Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- Vizag Seaport Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- White Energy Company Limited
- McConnell Dowell - Australia
- Jindal Steel & Power Ltd - India
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Marubeni Corporation - India
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- Bhatia International Limited - India
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- The University of Queensland
- ASAPP Information Group - India
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
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