We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Friday, 09 March 12
MINING IN INDONESIA: RESTRICTION ON FOREIGN INVESTMENT - SUNIL K KUMBHAT
 COALspot.com - Recently Govt has passed regulation instructing foreign mining companies to reduce their ownership stake.
The regulation known as GR 24 of 2012 ( Amendment of GR 23 of 2010 ), signed by President of Indonesia on Feb. 21,2012 stipulates that foreign shareholders/ Companies must gradually divest 51 percent of their shares in local mining companies to local investors after the fifth year of commercial production and complete the divestment by the 10th year of production. The divestment regulation resulted from a revision to a earlier GR 23 of 2010 that required foreign shareholders in local mineral and coal mining companies to divest 20 percent of their holdings.
The Director general for minerals and coals, said the regulation would not directly apply to contracts made prior to the issuance of the regulation , but so far no clarification in writing.
Local investors were defined by the regulation as the:
1.Central government,
2.Provincial , regency or municipal governments,
3.State-owned enterprises,
4.Regional enterprises and
5.National private companies.
The disinvestment shares are to be offered to entities in the order of priority listed above by way of auction.
Under the new requirement, mining companies must divest a total of 20 percent of their foreign shares from 6th year of starting production, 30 percent by the seventh year, 37 percent by the eighth year, 44 percent by the ninth year and 51 percent by the 10th year.
Prior to the issueance of GR 24/2012 , Mining Licences (IUP's) could not be transferred or assigned from one entity to another but GR 24/2012 provides that an Mining Licence may be transferred to another entity on the basis that the transferor holds a minimum of 51% of the shares in the assignee.
It effectively means foreigners are going to lose control after 10 years. Mining Sector is a capital intensive, risky , Complicated and time consuming business to invest in. By passing regulation and forcing foreign companies to divest within a fixed time frame and drastically changing the mining regulations is likely to discourage the interest of potential foreign investors to invest in the Mining Sector.
Historically, major foreign backed mining projects in Indonesia have been developed under contract based concessions - Contracts of Work (CoW) and Coal Contracts of work( CCoW )- entered into directly with the Government. These contracts covered the life of the project and larger areas than the new licence regime and were seen as a more secure regime , having economic and fiscal terms agreed in a contract that formed a "special law" between the Government and the mining company. In broad perspective such major changes in Govt regulations and increasing uncertainty and shift in foreign investment policy in the mining sector may consequently impact investment interest in other sector also.
The government is currently renegotiating all its contracts with CoW / CCoW mining companies across the nation in compliance with provisions of the 2009 Minerals and Coal Law.
The regulation would act as a disincentive for mining companies as five years is too short period to begin divestment, given that firms typically had 8 to 10 years to repay bank loans. If they have to divest 51% within 10 years, they are not yet reaching the break-even point of their investment.
Indonesia ,southeast Asia’s largest economy contains some of the world’s richest mineral deposits, such as the Freeport-run Grasberg, the world’s largest gold mine, and its fast-growing mining sector accounts for about 10-11 percent of GDP. The new regulation is the latest government move to extract higher domestic profit from the vast mineral wealth in the world’s top exporter of thermal coal and other minerals like tin , nickel, copper , Bauxite etc. But the change in regulation may deter foreign investment in mining sector.
The 2009 mining law was aimed at boosting investment in mining and metals processing, but its supporting regulations have not gone down well with the industry, and new investors still face risks such as policy reversals, local community demands, a tortuous permit process and poor infrastructure.
The latest regulation stipulating foreign ownership in Indonesia’s mining industry is bound to upset foreign investors and cheer local companies. The ruling will limit foreign companies from owning more than 49 percent of some mines, potentially limiting investments in a fast-growing sector.
Under the new regulation, foreign holders/ Companies of mining licenses in Indonesia , will have to cut their stakes to 49 percent at most within 10 years of starting production. Many foreign investors have already expressed grave concerns over this new ruling, arguing that mining is a capital-intensive industry and requires a long payback period.
Under the new ruling, foreign owners’ coal and minerals assets would required to sell the shares to the central and regional governments, state-owned companies or local private companies. This is itself not new, but the new time frame means that investors will not have enough time to recoup their investments, let alone make a profit.
Any country and Indonesia in this particular issue has every right to dictate the terms and conditions for foreign investors who wish to invest in the country. Many other countries also protect their local businesses, and it is the government’s duty to ensure that its own citizens benefit from the nation’s natural wealth.
Foreign investors often take huge risks and invest billions of dollars before they see returns. Their risk-taking allows the mining sector to grow and develop; without them, the country will be worse off. They have a right to expect a reasonable return on their investment, too.
The regulation had been promulgated with good intentions to empower local companies and boost their involvement in the mining industry.
But a balance must be struck between the two goals: attracting foreign investments and ensuring local communities also benefit. By requiring foreign shareholders to sell their stakes in mining assets to local entities, the government is attempting to strike this balance. The key issue is proper calibration of risk and reward ,considering the law of the land.
In spite of the fact that Mining sector in Indonesia is overregulated and lot of uncertainties ,the mining sector will remain most hot sector and cannot be ignored. There is always cost of doing business in Indonesia.
By : Sunil K Kumbhat , Jodhpur( Rajasthan ) India
Views expressed herein are personal views of the author and not that of COALspot.com.
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Monday, 12 March 12
DELTA DUNIA 1M OVERBURDEN DROPS 3.1% - INSIDER STORIES
Insider Stories reported that, Indonesia's second largest coal mining contractor PT Delta Dunia Makmur Tbk (DOID) reported a 25 million bank ...
Monday, 12 March 12
DRY BULK RATES WILL REMAIN LOW IN 2012 SAYS DANISH SHIP FINANCE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its annual shipping survey Danish Ship Finance said that the current outlook for the Dry Bulk market seems unlikely to foster higher rates in any ...
Monday, 12 March 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
The first days of March appear to be more encouraging for dry bulk operators, but the outlook is still gloomy for the rest of year with earnings for ...
Sunday, 11 March 12
FREIGHT RATES FOR INDONESIA TO INDIA WILL CONTINUE TO REMAIN FIRM- VISTAAR
COALspot.com - This week saw another upward trend with all indices up except for the Cape index.
The BDI was up by 6.87 pct closing at 824 points ...
Friday, 09 March 12
SHIP OWNERS LOOKING TO CHINA FOR REVIVAL, WHILE THEY KEEP SELLING OLD SHIPS FOR SCRAP - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With China’s economic policy plan for the future on every ship owner’s mind, at least those involved in the dry bulk industry, the lates ...
|
|
|
Showing 4811 to 4815 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- Australian Commodity Traders Exchange
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Minerals Council of Australia
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- Planning Commission, India
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parry Sugars Refinery, India
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Mintek Dendrill Indonesia
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Deloitte Consulting - India
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- ICICI Bank Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Dalmia Cement Bharat India
- Parliament of New Zealand
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- SMG Consultants - Indonesia
- The Treasury - Australian Government
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Georgia Ports Authority, United States
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- The University of Queensland
- Bhatia International Limited - India
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- LBH Netherlands Bv - Netherlands
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
|
| |
| |
|
