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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, 13 December 11
CAPESIZES AND PANAMAXES LEAD DRY BULK MARKET HIGHER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market inched closer to the 2,000 mark on Monday, with Panamaxes rebounding firmly and leading the gains. As a result, the industry&rsq ...
Monday, 12 December 11
DRY BULK MARKET LOOKING FOR BALANCE AS WE ENTER 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
During the past few months, freight rates for dry bulk carriers, especially Capesizes have increased significantly, providing ship owners with a muc ...
Sunday, 11 December 11
THE PANAMAX INDEX ENDED ON POSITIVE DIRECTION - VISTAAR
COALspot.com - The BDI and Cape index continued the upward trend this week also with BDI up by 3.00 pct closing at 1,922 points and Cape index up by ...
Saturday, 10 December 11
MAHAKAM RIVER RESUMES COAL TRANSPORTATION
COALspot.com - East Kalimantan local government has resumed limited coal barging through Mahakam River after two weeks of suspension following the c ...
Friday, 09 December 11
DRY BULK MARKET REBOUNDS ON HEALTHIER DEMAND OUTLOOK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market edged forward yesterday, at the highest rate of the past couple of weeks, as a result of stonger iron ore demand, backed by lowe ...
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- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Sakthi Sugars Limited - India
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Aditya Birla Group - India
- GMR Energy Limited - India
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Interocean Group of Companies - India
- Asmin Koalindo Tuhup - Indonesia
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- New Zealand Coal & Carbon
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- Economic Council, Georgia
- Trasteel International SA, Italy
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Chettinad Cement Corporation Ltd - India
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Agrawal Coal Company - India
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Deloitte Consulting - India
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