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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, 08 December 11
INDIA MAY SEE 41% ANNUAL GROWTH OF ITS COAL DEMAND DURING THE NEXT 5 YEARS - ICAP SHIPPING
India’s Ministry of Coal expects that India’s coal demand may face an annual 41% rise during the next 5 years, while its coal deficit is ...
Thursday, 08 December 11
HAREDA KRIDA GETS CONTRACT FROM BAYAN - INSIDER STORIES
Insider Stories reported that, coal miner PT Bayan Resources Tbk (BYAN), through its subsidiary dubbed PT Gunungbayan Pratamacoal (GPB), has signed ...
Thursday, 08 December 11
CAPESIZES LIFT DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Capesize vessels yesterday helped lift the dry bulk market which had been falling since the start of the week on lower cargo demand. As a result the ...
Wednesday, 07 December 11
ABM INVESTAMA EYES RP6.3 TRIO REVENUE - INSIDER STORIES
Insider Stories reported that, an energy integrated company PT ABM Investama Tbk is eyeing a 1.5 folds increase in revenue this year from Rp4. ...
Tuesday, 06 December 11
DRY BULK MARKET ENDS RALLY, STARTS WEEK WITH FALL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
After a series of increases which saw the dry bulk market’s benchmark, the Baltic Dry Index (BDI) increasing close to 1,900 points and rates o ...
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- Interocean Group of Companies - India
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- The University of Queensland
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- Banpu Public Company Limited - Thailand
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- Central Electricity Authority - India
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Parliament of New Zealand
- Planning Commission, India
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Eastern Coal Council - USA
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- Australian Coal Association
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
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