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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, 12 October 11
INDONESIAS COAL RUSH - JOSEPH KIRSCHKE
COALspot.com - Last winter, the Chinese government mobilized thousands of soldiers and reservists of the People’s Liberation Army to the port ...
Wednesday, 12 October 11
CAPESIZE - A SURPRISE JUMP IN RATES - BRS
There was a surge across all sizes last week, resulting in the BDI gaining 101 points to end the week at 2,000 points (+5.3%). The BCI reached 3,218 ...
Wednesday, 12 October 11
CAPESIZE FREIGHT RATES BOUND TO RETREAT FROM 2011 HIGHS ON THE BACK OF TONNAGE OVERSUPPLY SAYS BIMCO
According to Nikos Roussanoglou, Hellenic Shipping, with the BDI (Baltic Dry Index) breaking yet another 2011 high yesterday and ending the se ...
Tuesday, 11 October 11
GLENCORE, SUITOR FOR BUMI PLC? - INSIDER STORIES
Insider Stories reported that, the largest commodities trader in the world, Glencore International Plc, is considering an opportunity to acquire a m ...
Tuesday, 11 October 11
RENUKA COALINDO BUYS JAMBI COAL
PT Renuka Coalindo Tbk, formerly PT Allbond Makmur Usaha Tbk plans to acquire PT Jambi Prima Coal holder of mining concession in Pauh, Sa ...
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- Banpu Public Company Limited - Thailand
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Interocean Group of Companies - India
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- Siam City Cement PLC, Thailand
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- VISA Power Limited - India
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- Planning Commission, India
- Posco Energy - South Korea
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- PTC India Limited - India
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Therma Luzon, Inc, Philippines
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
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