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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, 29 November 11
DRY BULK MARKET BEGINS WEEK ON HIGHER NOTE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Contrary to what had been the case during the past few weeks, this one began on a high note for the dry bulk market, with the Capesize sector pullin ...
Monday, 28 November 11
CITING CONTRACTS, MINING FIRMS ARE NOT PAYING ROYALTIES UNDER LAW - THE JAKARTA POST
The Jakarta Post reported that, when the 2009 Law on Minerals and Coal was endorsed, hopes that Indonesia could maximize its revenue from the minera ...
Monday, 28 November 11
NEW ENVIRONMENTAL MARINE REGULATIONS TO IMPACT SHIPPING IN 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
August of next year will see some major changes for marine navigation. It’s when the North American ECA will come into force, introducing a 1% ...
Sunday, 27 November 11
INDIA'S KPCL TO IMPORT 50 MMT OF COAL FOR 10 YEARS
COALspot.com - Karnataka Power Corporation Limited (KPCL) will buy 5 million metric tonnes of coal annually for 10 years starting from 2015.
In a ...
Saturday, 26 November 11
INDIAN PORTS ARE BECOME COAL STOCKPILES..!!
COALspot.com - The Indian coal stocks and power tariff situation is the hot topic among the world coal producers as well as Indian coal importers.&n ...
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- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Karaikal Port Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
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- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
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- Bukit Makmur.PT - Indonesia
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- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Medco Energi Mining Internasional
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Indika Energy - Indonesia
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- Ind-Barath Power Infra Limited - India
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- TeaM Sual Corporation - Philippines
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- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Barasentosa Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
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- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
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- GAC Shipping (India) Pvt Ltd
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- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- Sical Logistics Limited - India
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Australian Coal Association
- The University of Queensland
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Planning Commission, India
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
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