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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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Saturday, 26 November 11
THE FREIGHT MARKETS EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com - The market were down probably with the sentiments of global financial markets and all segments were down.
The BDI was up down by 4 ...
Friday, 25 November 11
DISPUTE BETWEEN GIANT MINING FIRMS ENDS IN LAHAT - THE JAKARTA POST
The Jakarta Post reported that, prolonged dispute taking place in the South Sumatra regency of Lahat and involving two giant mining companies PT Buk ...
Friday, 25 November 11
DRY BULK MARKET LOSING STEAM, FAST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
It’s been a week of falls for the dry bulk market this one, leaving ship owners with a sour taste in their mouths, as evidence of a recovery i ...
Thursday, 24 November 11
INDONESIA/INDIA SPMX TC AROUND $ 7/8K AND AROUND $ 12/13.00 PMTS ON VOYAGE BASIS - FEARNLEYS
Handy
Last week ended on a positive note in the Atlantic however the activity levels are somewhat reduced. Owners are asking in excess of USD ...
Thursday, 24 November 11
DRY BULK MARKET KEEPS LOSING STEAM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was lower once again on Wednesday, with the industry’s benchmark, the Baltic Dry Index (BDI) ending the session down by 1. ...
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- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- ASAPP Information Group - India
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- Planning Commission, India
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Riau Bara Harum - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Posco Energy - South Korea
- Gujarat Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Iligan Light & Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Ambuja Cements Ltd - India
- Carbofer General Trading SA - India
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Vedanta Resources Plc - India
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- Bangladesh Power Developement Board
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Mercator Lines Limited - India
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
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