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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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Thursday, 26 November 09
CIL EYES OVERSEAS ACQUISITIONS TO BRIDGE SUPPLY GAP
Coal Minister Sriprakash Jaiswal on Wednesday said that state-run coal major Coal India is looking to acquire coal blocks in the US and
othe ...
Wednesday, 25 November 09
NAPOCOR SCRAPS AWARD OF 715,000 TONS COAL
Top Philippine electricity producer National Power Corp. (Napocor) said on Wednesday it had cancelled plans to award 715,000 tons in coal supply con ...
Wednesday, 25 November 09
RISING FREIGHT RATES HIT COAL IMPORTERS
While state-owned NTPC’s 12.5 million tonne coal import order may have been aimed at plugging the shortage of coal at its thermal power plants ...
Wednesday, 25 November 09
CSN TO BUY RIVERSDALE STAKE TO BOOST COAL SUPPLIES
Cia. Siderurgica Nacional SA plans to buy 16.3 percent of Australian coal-exploration company Riversdale Mining Ltd. for about A$190.5 million ($175 ...
Tuesday, 24 November 09
ICRA DOWNGRADES TNPL`S RATING TO LAA
Credit rating agency, ICRA has revised the long term rating for the Rs 11.25 billion long-term fund-based bank facilities and Rs 1.5 billion non-con ...
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- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Deloitte Consulting - India
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Banpu Public Company Limited - Thailand
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Miang Besar Coal Terminal - Indonesia
- Sakthi Sugars Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- Parry Sugars Refinery, India
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- White Energy Company Limited
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- Simpson Spence & Young - Indonesia
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- Economic Council, Georgia
- McConnell Dowell - Australia
- Wood Mackenzie - Singapore
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Australian Coal Association
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Electricity Authority - India
- Makarim & Taira - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Commonwealth Bank - Australia
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