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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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Thursday, 05 January 12
DRY BULK MARKET TAKES A PLUNGE OF LOW ACTIVITY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was widely expected the first days of the new year are characterized by significantly low chartering across the board of the dry bulk market, pus ...
Wednesday, 04 January 12
NEWBUILDING ORDERS PICKED UP IN 2011, BUT 2012 EXPECTED TO BE A DIFFERENT STORY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the BDI (Baltic Dry Index) starting the year on a sour note, losing 114 points and ending yesterday’s session, the first of the new year, ...
Wednesday, 04 January 12
MAHAGENCO TO IMPORT LOW MOISTURE COAL
COALspot.com - Maharashtra State Power Generation Co. Ltd. is the state power generation utility owned by Government of Maharashtra, intends to proc ...
Tuesday, 03 January 12
INDONESIA COAL REFERENCE PRICE FELL AGAIN
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has sets the January 2012 coal reference price at US$ 109.29 per ton or US$ 3.3 ...
Tuesday, 03 January 12
WHICH WAY WILL THE DRY BULK MARKET HEAD ON FIRST WEEK OF THE YEAR? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Dry bulk ship owners will be wondering which way will the BDI (Baltic Dry Index), the industry’s benchmark, will head during the first days of ...
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- Australian Commodity Traders Exchange
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Economic Council, Georgia
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Kobexindo Tractors - Indoneisa
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Interocean Group of Companies - India
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Makarim & Taira - Indonesia
- The University of Queensland
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Malabar Cements Ltd - India
- PTC India Limited - India
- Therma Luzon, Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- MS Steel International - UAE
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Kideco Jaya Agung - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- Bangladesh Power Developement Board
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- Jaiprakash Power Ventures ltd
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