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Friday, 07 October 11
MINING REGULATIONS , OBSTACLES AND GROWTH : INDIA VS INDONESIA - SUNIL K KUMBHAT
 COALspot.com - The Govt of India has passed long pending Mines & Minerals (Regulation and Development) Bill, 2011, which seeks to replace 1957 act governing mining sector .The bill is now subject to final approval by Indian Parliament.
Indian New Mining Bill
This landmark draft bill that allows local people to get the financial benefits of mining activities. Bill smoothens land acquisitions through higher compensation to people displaced and simplifies relief and rehabilitation issues.
Inadequate compensation and the fear of loss of livelihood have often lead to violent protests by people displaced by mining and related industries, blocking acquisitions of land for several upcoming Mega projects.
The bill, requires coal mining companies to pay 26 per cent of their Profit after Tax to “district mineral foundations” (DMFs), to the district administrations. Funds collected by district collectors will be spent on development projects for the locals, mainly tribal communities residing in the mining areas. In the case of non-coal miners 100 % payment equivalent to royalty required to be paid to state government to affected persons.
If the bill is enacted (which is a big question mark), an estimated amount of US$ 2.04 billion (approx) will be generated per year from miners and an average amount of US$ 36.75 to $ 40.84 Million will be distributed among District Mining Foundations of 60 mineral rich districts. Undoubtedly, it’s a landmark move, to provide justice to scores of tribals who have lost and continue to lose, their land and livelihood across the country due to mining activities.
It is expected that this bill be strong enough to crush the biggest devil of all - the ill-legal mining.
The Bill addresses the burning issue of illegal mining, as it provides for setting up a regulatory authority (National Mining Regulatory Development Authority) to govern the sector. It will have powers to investigate and prosecute the offenders. The authority would also be empowered to look into the cases of organised illegal mining.
This move may not attract private investment in the mining sector, which is badly needed. The mining activity will come down so also production, which Indian economy cannot afford.
The move is all set to push down profits of major mining and power companies, mainly Coal Indian Ltd. Coal India, which will be hit the most as it will have to share 26% of its profit, which means lesser funds available for further mine development for growth, higher production, and distribution of dividends.
Coal India will be left with no Choice but to pass the burden to its customers.
Environmental Consciousness
The environmental impact of mining operations in India is under sharp scrutiny than many other countries. Environmental consciousness is increasing in India.
If environmental issues & challenges are left unmitigated, it will inevitably affect the poorest, rendering trade unsustainable. The moot point is how to ensure the benefits of trade percolate down to the bottom. There is a worldwide increase in globalised economic activity, huge environmental degradation and widening income inequality. So achieving sustainable development will critically depend on proactive resolution of the issues at domestic and international levels.
Never before India has such a high demand for coal, so also environmental consciousness been so high. Both are legitimate & serious issues But the solution is not to clamp down on coal production. India’s soaring energy need is vital for its industrial growth.
India's increasing energy needs are being hampered by regulatory delays for coal mining projects. Sometime back Govt of India (Environment and Forests Ministry) announced many Coal fields as “NO –GO” zones, which is seriously effecting Coal mining projects and Coal production.
In last 4-5 few years there is huge demand of thermal Coal and considering the planned Capacity building in Energy sector there would be hue and cry for Coal demand unless there is substantial increase of Coal Production in India.
Although India is considered as fifth-largest coal reserves in the world much of it is under protected forests and so mining projects face fierce environmental scrutiny.
There is so much hue and cries over the forest conservation. Coal is nature's gift & treasure and coal mines can’t be shifted to another area due to regulatory issues. There is a urgent need to re-examine the regulations and policies associated with exploration and production. Various government regulations concerning forestry and environmental restrictions are hindering mine development. Unless such bottlenecks are addressed, growth in domestic coal production will not match the higher demand.
Independent Regulator
The long term growth of the coal sector in India requires a confident and renewed mindset in developing coal resources through decontrol of the Coal sector, establishment of an independent regulator.
The time has come for Govt of India to establish technically-competent and independent regulators for coal, iron ore and other minerals. The regulators should draw up the necessary regulations and enforcing them strictly, de-politicise the sector and minimise violations of environmental laws and the rights of Local peoples.
Government thru its regulator should ensure that its policy framework attracts large, organised, technologically well-equipped and socially - and environmentally-conscious mining companies which are more susceptible to public pressure and less prone to corrupt and illegal business operating practices. Such companies could effectively develop those mineral reserves which lie either under forest cover or lands populated by local peoples without causing environmental or social damage.
The regulator will have the responsibility of allocating coal mines, price fixation and revision; and performance standards-setting and enforcement, pricing of coal washing, washed coal and by-products generated during the process among other things.
The magnitude of growth in power generation in India will necessarily mean that coal demand will remain very strong. Coal will remain life line for Indian economy for coming many decades till identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India .
Ban on Export of Unprocessed Coal from Indonesia
Recently Govt of Indonesia announced its plan to ban the export of unprocessed and unrefined Coal / Mining products from January 2014.
In its current form, the Draft Value Added Regulation envisages that, starting from January 2014, it will no longer be possible to export Coal from Indonesia having calorific value of 5700 kcal/kg GAD or below.
The proposed ban on exports of coal under the 5,700-kcal/kg will change the dynamics of the global thermal coal market, which has seen spiraling demand from China and India. Such a ban will have a substantial impact on the thermal coal market, as large amounts of low-quality coal from Indonesia are exported to India and China.
Coal quality of 4500 and 5,700 kcal/kg, constitutes a significant portion of exports out of Indonesia and, considering the country accounts for about 30 per cent of the global thermal coal supply, an export ban could reduce worldwide supplies by at least 10-15 per cent.
India is already one of the largest buyers of coal from Indonesia, and continue to maintain this position considering the growth in domestic demand and stagnating production of major miners such as Coal India Ltd. There will be an overall impact on the Indian power sector, as currently about 60 per cent of the total thermal coal imports are coming from Indonesia.
The Draft Regulation raises many challenging issues including, most importantly, how appropriate and realistic is a tough domestic processing and refining obligation in a country like Indonesia. The 5700 kcal/kg GAD minimum upgrading requirement only makes sense if, by 2014, coal upgrading will be a proven technology, widely available to all Indonesian producers of low grade coal.
In the absence of widespread coal upgrading cost effective technology, this could prevent the export from Indonesia of up to 150-175 million metric tons of low grade coal and Govt’s true policy objectives behind the proposed Draft Value Added Regulation requires detailed & critical analysis.
Role of Indonesia
As the situation stands today, India could become the world’s biggest thermal coal importer by 2015 and Indonesia would be one of the Countries to take care of bulk of coal requirement.
India is today one of the fastest growing economies and also has a shortage of power supply. Indonesia is one of the peaceful countries with huge natural resources and exporting coal to many countries for use in power plants for generating energy but it is paradoxical that Indonesia is short of energy. Many Indian companies are capable of sharing power technology and setting up mega power plants in Indonesia
Indonesian private companies can buy equity stakes in India’s power plants in exchange for long-term coal supply. Since India is today one of the fastest growing economies and also has a shortage of power supply then such deals can be beneficial to both parties
Indonesia requires huge investment from foreign investors in infrastructure, Power Generation, Oil & Gas exploration, telecom sector, Port and Rapid transport system. So it is essential to have transparency in all regulations, Legal system and improvement in corporate Governance.
Indonesia's mining industry is undergoing a regulatory overhaul which may weaken the operating health and financial performance of many domestic mining companies.
Besides increased operating uncertainty the new regulations of recent past & proposed may also make the mining industry less attractive to foreign investors. lack of transparency in the legal process and the risk of regulatory duplication and inconsistencies will continue to act as deterrents to substantial investment ,specially foreign direct investments (FDI).
While developed economies struggle with global financial crisis and slowdown of demand, Indonesia (together China and India) could be the consumer market for the future. Similar to China and India, urbanisation is an important driver of Indonesia’s growth. Indonesia is ready to rise in the world economic hierarchy and take its place alongside China and India. Indonesia is now perceived as one of new Asian Tigers , even altering the term of BRIC into BRIIC ( Brazil , Russia , Indonesia , India and China)
Whether BRIC will become BRIIC is yet to be seen. Indonesia is the third fastest growing economy in Asia, behind India and China. It has passed through the economic crisis with firmness unmatched elsewhere in the region and indeed in the world. (cs)
Views expressed herein are personal views of the author and not that of COALspot.com.
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Wednesday, 26 October 11
PWCS GLOBAL SHIPPING BENCHMARKING ANALYSIS: RECOVERY IN 2010 BUT GREAT UNCERTAINLY FOR 2011
The recovery of global trade in 2010 to the same levels as 2008 led to an improvement in the overall performance of shipping companies in 2010 compa ...
Wednesday, 26 October 11
INDIAN MARKET WAS REMAINED TIGHT THE WHOLE LAST WEEK - BRS
The market once more seems to be at a crossroads. The indices last week remained fairly stable (except for the Panamax sector), ending the week as f ...
Tuesday, 25 October 11
DRY BULK MARKET STEADY, ANALYSTS LOOKING FOR ADDED PRESSURE ON THE MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was unchanged on Monday, with the industry’s benchmark, the BDI (Baltic Dry Index) ending the session at 2,153 points, exa ...
Monday, 24 October 11
NEW HEAD OF INDONESIA'S MINING MINISTRY GETS RAKED OVER THE COALS - JOSEPH KIRSCHKE
COALspot.com - Following Indonesia’s presidential cabinet shakeup last week, many are questioning the qualifications of Energy and Mineral Res ...
Monday, 24 October 11
CHINA QINHUANGDAO COAL PRICE RISES TO HIGHEST IN THREE YEARS - BUSINESSWEEK
Business week reported that, China’s power-station coal price rose to the highest level in three years as power stations and central heating p ...
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- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Planning Commission, India
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Marubeni Corporation - India
- Parliament of New Zealand
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- GVK Power & Infra Limited - India
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Sree Jayajothi Cements Limited - India
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Singapore Mercantile Exchange
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- Semirara Mining Corp, Philippines
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Commonwealth Bank - Australia
- Makarim & Taira - Indonesia
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Bangladesh Power Developement Board
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- Aboitiz Power Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- Bhatia International Limited - India
- Indian Energy Exchange, India
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- White Energy Company Limited
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Karaikal Port Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Port Waratah Coal Services - Australia
- Wood Mackenzie - Singapore
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
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