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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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Monday, 10 October 11
MOZAMBIQUE CHANNEL TO BE THE NEW PIRACY HOTSPOT FOR THIS YEAR SAYS MARITIME SECURITY EXPERT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The Mozambique Channel, as well as the entrance to the Persian Gulf, are expected to become some of the new pirate hotspots for piracy, says Richard ...
Sunday, 09 October 11
FREIGHT MARKET ENDED WITH A POSITIVE DIRECTION - VISTAAR
COALspot.com - The market ended with a positive note with all the segments up except for handy size. The biggest gainer was Panamax index up by 11 p ...
Saturday, 08 October 11
INDONESIAN MINER PLANS $167M IPO TO FUEL SUMATRA COAL BOOM - JG
The Jakarta Globe reported that, coal miner Atlas Resources aims to raise as much as Rp 1.5 trillion ($167 million) in an initial public offering to ...
Friday, 07 October 11
$100M FOR EXPANSION INTO KALIMANTAN MINING: AKR
The Jakarta Globe, one of the leading English news paper in Indonesia reported that, AKR Corporindo, a fuel and chemical distributor, has set aside ...
Thursday, 06 October 11
REALM SECURES 51% OF KATINGAN RIA COAL PROJECT IN CENTRAL KALIMANTAN
•Realm secures 51% of PT Katingan Ria Thermal Coal Project in Central Kalimantan
•Realm takes ownership of Kalres Limited
•Acquisit ...
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- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Mercuria Energy - Indonesia
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bulk Trading Sa - Switzerland
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Banpu Public Company Limited - Thailand
- Minerals Council of Australia
- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- Merrill Lynch Commodities Europe
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- The University of Queensland
- Thiess Contractors Indonesia
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Deloitte Consulting - India
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Australian Coal Association
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- GAC Shipping (India) Pvt Ltd
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