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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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Saturday, 15 October 11
BUNKER PRICES AND DEMANDS PUSHED FREIGHT RATES UP - VISTAAR
COALspot.com - The market continued to be firm with all segments moving up with biggest gain in Handy size segment up by 15 pct. The BDI was u ...
Saturday, 15 October 11
BENGAL COAL IMPORT TEST - THE TELEGRAPH
The Telegraph reported that, the power position in Bengal improved today but alarm bells are ringing over imported coal stocks that are running out ...
Friday, 14 October 11
CAPE DERIVATIVES MARKET HAS NOT REFLECTED OWNERS EXPECTATIONS' - FEARNBULK
Handy
The Atlantic market continued its upward trend, with fresh cargo entering the market. Skaw Passero to US Gulf climbed US$ 1500 from la ...
Friday, 14 October 11
ADARO BUYS SERVO MEDA FOR RP200 BIO - INSIDER STORIES
Insider Stories reported that, PT Adaro Energy Tbk (ADRO) announced that its subsidiary PT Alam Tri Abadi (ATI), acquired 35% stake in PT Serv ...
Thursday, 13 October 11
DRY BULK MARKETS RALLY CONTINUES, BUT ANALYSTS WARN IT WILL BE SHORTLIVED - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market continued its push forward yesterday, for yet another session, as the BDI (Baltic Dry Index), the industry’s benchmark edg ...
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- Interocean Group of Companies - India
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kartika Selabumi Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- Central Java Power - Indonesia
- VISA Power Limited - India
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Iligan Light & Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Bharathi Cement Corporation - India
- IHS Mccloskey Coal Group - USA
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Electricity Generating Authority of Thailand
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- McConnell Dowell - Australia
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- Malabar Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Minerals Council of Australia
- Thai Mozambique Logistica
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Indika Energy - Indonesia
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