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Monday, 23 November 09
INDONESIA MINING RULE THREATENS INVESTMENT DRIVE
 A new Indonesian mining rule, limiting contract work that can be outsourced and favouring local players, is shaping up as a new blow to plans to boost mining investment in Southeast Asia's biggest economy.
The rule, attached to a mining law passed last year, presents an immediate challenge for new energy and mining minister Darwin Saleh, who was sworn in last month amid hopes that a new government could boost the resources sector.
The mining law, which replaced one issued 41 years ago, aims to squeeze more benefits from rich mineral reserves in Indonesia, the world's top exporter of tin and thermal coal and a key producer of zinc, copper, nickel and gold.
But Indonesia has seen little new foreign investment in metal mining in recent years and the energy and mining ministry's new rules seems likely to dampen enthusiasm among potential investors.
"It will increase costs for miners because they have to buy their own equipment and hire new people," said Priyo Pribadi Soemarno of the Indonesian Mining Association.
To contain costs, most mining firms in Indonesia, particularly coal firms, rely on contractors for work ranging from actual mining to stockpiling of minerals.
But the new regulation limits contractors to stripping away top soil and transporting mining products, while the miner itself has to extract minerals.
The move would encourage inefficiency and was out of step with global trends, said Soemarno, the executive director of the mining group. "Mining companies globally are trying to slim down their organisations," he said.
Former Mining and Energy Minister Purnomo Yusgiantoro signed the new regulation at the end of September.
His successor, a suprise pick in President Susilo Bambang Yudhoyono's cabinet last month, has not publicly commented on it and little is known of his policy stance.
Indonesia has struggled to lure foreign investment into mining in recent years, compounded by some politicians taking a nationalist line on resource exploitation and also because of uncertainty over regulations.
Major global resource firms operating in Indonesia include Freeport-McMoRan Copper & Gold Inc and Newmont Mining Corp, but much of the investment was made decades ago.
Investment in mining, including coal and geothermal, rose to $1.65 billion in 2008 from $1 billion in 2004 but mostly came from existing miners rather than new entrants.
Some foreign firms have already shelved investment plans since last year, partly due to uncertainties over the new mining law, which also includes contentious items such as shorter-term mining permits rather than longer-term contracts of work.
Miners will also have to process minerals in Indonesia and to set aside some of their coal for the domestic market.
COAL MINERS TO SUFFER MOST
The new mining services rule limits miners' use of contractors, and when allowed to use one, they must give a local contractor first preference and need the energy ministry's permission to hire affiliates.
David Kiu, an analyst at Eurasia Group, said the new rule was mainly aimed at curtailing transfer pricing, a practice rife in Indonesian mining, by which firms in the same group sell to each other at artificial prices to avoid taxes.
The new regulation applies immediately to new mining projects but allows existing miners a term of three years to adjust.
The regulation will have a bigger impact on coal producers, since they tend to use mining contractors for nearly all their mining activities, some experts said.
PT Adaro Energy Tbk, Indonesia's largest coal miner by market value, and PT Berau Coal, the fifth-biggest by volume, currently outsource their entire mining activities.
Sacha Winzenried, a mining partner at PricewaterhouseCoopers Indonesia, said coal companies would have to do more themselves and weigh up local contractors over foreigners.
"This will result in increased expenditures on capital equipment," Winzenried said.
Miners whose affiliates carry out mining activities might need to restructure their businesses after the end of the exemption period, he added.
"It's either by merging the contract mining business with the mining company or transferring the assets, or selling-off the contract mining altogether," Winzenried said.
Companies are still assesing the cost impact, although rating agency Fitch said it did not see negative rating implications for firms it covers including PT Adaro Indonesia and PT Indika Energy Tbk
But an executive at a top coal firm, who declined to be identified, said the regulation would significantly increase the requirements for capital, possibly limiting expansion.
"By employing contractors, this limits the capital requirements for heavy equipment and therefore we can expand faster."
The Indonesian Mining Association fears mining investment could fall below $1 billion this year due to uncertainty over the new law, although the government has said investment from mining -- including geothermal -- could surpass $2 billion.
Last year, mining giant BHP Billiton scrapped a study to develop an integrated nickel project in eastern Indonesia and decided not to go ahead with a coal mine in Central Kalimantan. Tsingshan Mineral Company Ltd had scrapped a $500 million nickel project in North Maluku in Indonesia.
"If the regulation is not amended, new investors will think over before investing because it will increase costs and not every mining company is capable of increasing their investment," said Soemarno of the Indonesia Mining Association.
Source: Reuters / Alibaba
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Tuesday, 05 January 10
WINTER WEATHER SPIKES COAL PRICES - CHINA UPDATE
Cold weather is driving coal prices higher and will lend the advantage in annual negotiations to suppliers, analysts said, predicting that the risin ...
Monday, 04 January 10
TOKYO ELECTRIC SEALS XSTRATA COAL DEAL
Tokyo Electric Power Co has agreed to pay about $US85 a tonne for Australian thermal coal in 2010 from miner Xstrata, a source familiar with the pri ...
Monday, 04 January 10
IND-BARATH TO SHIFT PROJECT FROM AP TO TN
Hyderabad-based power producer Ind–Barath is planning to set up a power plant at Tuticorin, Tamil Nadu. The proposed project would attract inv ...
Sunday, 03 January 10
NEWCASTLE THERMAL COAL PRICES FALL IN FIRST DECLINE IN 3 WEEKS
Power-station coal prices at Australia’s Newcastle port, a benchmark for Asia, declined 1.5 percent, falling for the first time in three weeks ...
Sunday, 03 January 10
NTPC SEEKS REPORT ON TRANSPORTING COAL THROUGH WATERWAYS
State-run National Thermal Power Corporation (NTPC), the country’s largest power utility, has asked for a “holistic” feasibility r ...
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- Intertek Mineral Services - Indonesia
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Neyveli Lignite Corporation Ltd, - India
- Riau Bara Harum - Indonesia
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Port Waratah Coal Services - Australia
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- PTC India Limited - India
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- European Bulk Services B.V. - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- Mercator Lines Limited - India
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Bulk Trading Sa - Switzerland
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- Africa Commodities Group - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Simpson Spence & Young - Indonesia
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Bangladesh Power Developement Board
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- ASAPP Information Group - India
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Vizag Seaport Private Limited - India
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Australian Coal Association
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
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- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
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