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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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Tuesday, 27 September 11
A STRONG REBOUND FOR THE CAPE MARKET - BRS
A strong rebound for the Cape market, as cargoes continued to flow into the market and tonnage remained tight in the Atlantic, according to Barry Ro ...
Tuesday, 27 September 11
INTRACO SEALS US$25.3 MIO ORDER - INSIDER STORIES
Insider Stories reported that, Heavy equipment distributor PT Intraco Penta Tbk (INTA) obtained a US$25.3 million order on hand of heavy equipments ...
Sunday, 25 September 11
THE CHARTER RATES FOR INDONESIA TO INDIA WAS FIRM - VISTAAR
COALspot.com - The freight market moved up sharply with the cape Index up by 11 pct pushing the BDI by almost 6 pct and closing at 1,920 point ...
Saturday, 24 September 11
GOVT PLANS TO RENEGOTIATE ALL CONTRACTS INCLUDING FREEPORT - JP
The Jakarta Post reported that, the Energy and Mineral Resources Ministry has confirmed plans to renegotiate all mining contracts including those wi ...
Friday, 23 September 11
ICMA TO BUILD UPGRADE FACILITIES TO ANTICIPATE BAN ON LOW-GRADE COAL EXPORT BY 2014
COALspot.com - January to August of this year, Indonesia’s coal production had already reached 235 million tons. Earlier estimates had targete ...
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- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Romanian Commodities Exchange
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- White Energy Company Limited
- Aboitiz Power Corporation - Philippines
- Edison Trading Spa - Italy
- Coalindo Energy - Indonesia
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- Independent Power Producers Association of India
- Deloitte Consulting - India
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- European Bulk Services B.V. - Netherlands
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bangladesh Power Developement Board
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Bharathi Cement Corporation - India
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The University of Queensland
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Electricity Regulatory Commission - India
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Petron Corporation, Philippines
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