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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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Friday, 23 September 11
UT TO PRODUCE 7 MMT OF COAL BY 2012
PT United Tractors Tbk is targeting a 7 million tons of coal production next year, a 55.55% increase from 4.5 millions targeted this year, said Pres ...
Friday, 23 September 11
RECORD RECYCLING ACTIVITY STIRS OPTIMISM IN DRY BULK SAYS BIMCOS ANALYSIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As expected at the start of the year, dry bulk ship owners were expected to flock scrapyards around the world, in order to take advantage of attract ...
Friday, 23 September 11
PANAMAX EXPERIENCED A SOFTENING IN RATES - FEARNLEYS AS
Handy
Still a good boost of fresh cargoes entering the market. Vessels in Black Sea with GOA clearance and Baltic positions are fetching tick abov ...
Wednesday, 21 September 11
INDIA'S COAL IMPORTS FROM INDONESIA FALL, CHINA BUYS MORE
COALspot.com - Indian coal imports from Indonesia fall to below 6 million tons in August, and this fall was continuing last few months. Ho ...
Wednesday, 21 September 11
2ND ANNUAL SHALE GAS SUMMIT
2nd Annual Shale Gas Summit 31 October – 3 November 2011 JW Marriott Hotel, Hong Kong
According to a recent EI ...
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- SN Aboitiz Power Inc, Philippines
- Georgia Ports Authority, United States
- The University of Queensland
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
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- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Offshore Bulk Terminal Pte Ltd, Singapore
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Thiess Contractors Indonesia
- Parliament of New Zealand
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Mintek Dendrill Indonesia
- Larsen & Toubro Limited - India
- Latin American Coal - Colombia
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- Australian Coal Association
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Mjunction Services Limited - India
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- Economic Council, Georgia
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- GMR Energy Limited - India
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Aditya Birla Group - India
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
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