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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, 24 January 12
BUKIT ASAM FY11 NET PROFIT SURGES 50% - INSIDER STORIES
Insider Stories reported that, the state-controlled PT Bukit Asam Tbk (PTBA) estimated to book Rp3 trillion (approximately US$ 335,570,469) net prof ...
Sunday, 22 January 12
FREIGHT MARKET DROPPED TO THE LOWEST LEVEL SINCE 2008
COALspot.com - "The markets continued to soften almost reaching 2008 levels breaking the 1,000 point mark", said Capt. Reddy of Vistaar Sh ...
Saturday, 21 January 12
ASIAS PREMIER COMPREHENSIVE OPEN CUT MINING CONFERENCE SCHEDULED FOR FEBRUARY 2012
As the only such conference in the region for miners and service providers, IBC Asia’s Open Cut Mine Planning & Operational Excellence con ...
Saturday, 21 January 12
COAL MARKETS CELEBRATES A DECADE OF BRINGING BUYERS & SELLERS TOGETHER
In 2012, IBC Asia’s premier Coal Markets conference series – Asia’s only globally focused coal import, export and supply chain eve ...
Saturday, 21 January 12
SAMIN TAN COMPLETES BUMI PLC TAKEOVER - INSIDER STORIES
Insider Stories reported that, Indonesian coking coal miner PT Borneo Lumbung Energi & Metal Tbk (BORN), that is controlled by stellar businessm ...
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- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Bhushan Steel Limited - India
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- White Energy Company Limited
- Planning Commission, India
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Aditya Birla Group - India
- Petron Corporation, Philippines
- Interocean Group of Companies - India
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
- Eastern Energy - Thailand
- The State Trading Corporation of India Ltd
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Bayan Resources Tbk. - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- Australian Coal Association
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Orica Mining Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Bulk Trading Sa - Switzerland
- Ministry of Finance - Indonesia
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Chettinad Cement Corporation Ltd - India
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