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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, 08 November 11
COAL MINER ABM INVESTAMA PLANS $290M PUBLIC OFFERING - JG
The Jakarta Globe reported that, ABM Investama, an Indonesian coal miner controlled by the Hamami family, plans to raise as much as Rp 2.6 trillion ...
Monday, 07 November 11
CHINA'S COAL IMPORTS STEAM AHEAD
Chinese seaborne coal imports have grown greatly in recent years, up from 39.2mt in 2008 to 167.7mt in 2010, with the result that China became a net ...
Saturday, 05 November 11
DEMAND SLUMP THREATENS MORE PAIN FOR BULK VESSELS - VISTAAR
COALspot.com - The market continued to fall with BDI dropping below 2,000 points by around 10 pct and closing at 1817 points. The cape index also co ...
Saturday, 05 November 11
BERAU STARTS TO EXPLORE BINUNGAN SITE - INSIDER STORIES
Insider Stories reported that, coal miner PT Berau Coal, a 90% owned subsidiary of PT Berau Coal Energy Tbk (BRAU), is busy to hold exploration in B ...
Friday, 04 November 11
INDIAN IRON ORE MARKET REMAINS DEAD - FEARNLEYS
Handy
The Atlantic market kept its strong position from last week. Even with fewer fixtures reported. Fronthauls still around 25k, wit ...
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- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Bulk Trading Sa - Switzerland
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Bharathi Cement Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- TeaM Sual Corporation - Philippines
- Posco Energy - South Korea
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
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