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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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Wednesday, 28 October 09
INVESTMENT IN MINING SECTOR HAMPERED BY LATE REGULATIONS
The Jakarta Post reported that, Indonesia may have to wait for a potential massive inflow of new investment into the mining sector due to delays in ...
Tuesday, 27 October 09
CHINA'S SEPT. COAL IMPORTS RISE AS ECONOMY RECOVERS
Bloomberg reported that, China, the world’s largest coal user and producer, increased imports of the fuel in September to meet rising domest ...
Monday, 26 October 09
DARWIN EYES PRIVATE INVESTMENT
The Jakarta Post reported that, the new energy and ministerial resources minister, Darwin Zahedy Saleh, has set his sights on accelerating the reali ...
Sunday, 25 October 09
THE FUTURE FREIGHT MARKET IS EXPECTED TO HAVE POSITIVE DIRECTION - VISTAAR
COALspot.com (Singapore): According to Vistaar Shipping an experienced ship operator in Singapore, the BDI shot up this week (19-24 October) by abou ...
Saturday, 24 October 09
NTPC SEEKS ALTERNATE COAL SUPPLY FOR KAHALGAON
State-run NTPC is looking at alternate sources of coal to fire its Kahalgaon (Bihar) and Farakka (West Bengal) and power stations, which are facing ...
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- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Australian Coal Association
- Ind-Barath Power Infra Limited - India
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- Port Waratah Coal Services - Australia
- Planning Commission, India
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PowerSource Philippines DevCo
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Indo Tambangraya Megah - Indonesia
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Marubeni Corporation - India
- Baramulti Group, Indonesia
- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Australian Commodity Traders Exchange
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
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