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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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Sunday, 03 January 10
BHP TO STAY IN MARUWAI AND TO KEEP 75 PERCENT OF THE STAKE
Despite recent statements that it would pull out completely from Indonesia, the world's largest mining company BHP Billiton has now admitted that i ...
Saturday, 02 January 10
INDONESIAS COAL OUTPUT RISES BY 5%
Indonesia, Asia’s largest coal exporter, produced 254 million tons of coal in 2009, a 5.8 percent increase from 2008 and well ahead of the gov ...
Saturday, 02 January 10
TAIPOWER FORECASTS COAL DEMAND TO SNAP DECLINE
Taiwan Power Co., Asia's biggest importer of thermal coal, expects its demand for the fuel to rise in 2010 after falling for two years as the islan ...
Friday, 01 January 10
COAL INDIA TO START IMPORTING DIRECTLY
According to sources, the coal major has already finalised tender document to import four million tonnes thermal grade coal for supplies to NTPC. Th ...
Thursday, 31 December 09
INDONESIA SEES 2010 MINING INVESTMENT UP 39 PCT
Reuters reported that, Indonesian mining investment is expected to hit $2.5 billion next year, up from $1.81 billion in 2009, supported by greater c ...
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- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karaikal Port Pvt Ltd - India
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Coal and Oil Company - UAE
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- MS Steel International - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
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- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Planning Commission, India
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- Sojitz Corporation - Japan
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Romanian Commodities Exchange
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- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
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- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- Energy Link Ltd, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
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