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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, 20 September 11
MTD INAUGURATES ITS COAL TERMINAL IN JAVA ISLAND
Press Release – MTD Group of Malaysia, one of prominent key players in the development of infrastructure in Malaysia, today inaugurated their ...
Tuesday, 20 September 11
DRY BULK MARKET LOSING ITS EDGE, RETREATING AT THE START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
After a surge during the past couple of weeks, which saw Capesize earnings boosted and the BDI (Baltic Dry Index) reaching levels of year high and c ...
Monday, 19 September 11
CHINA IMPORTS MORE THAN 10 MMT INDO COAL IN AUGUST 2011
COALspot.com - Indonesian coal exports dropped 1.642 million tons in August compared to July exports. Indonesia exports 29.662 million tons of coal ...
Monday, 19 September 11
INDOMOBIL ENTERING INTO COAL MINING BUSINESS
COALspot.Com- PT Indomobil Sukses Internasional Tbk, part of, one of Indonesia's largest conglomerates, to enter into mining industry ac ...
Sunday, 18 September 11
THE COAL IMPORTS TO INDIA, OUT OF INDONESIA LIKELY TO PICK UP - CAPT. REDDY
COALspot.com - The freight market continued the upward trend until midweek almost touching 2,000 points, however towards second half of the week the ...
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- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
- VISA Power Limited - India
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Planning Commission, India
- Miang Besar Coal Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Simpson Spence & Young - Indonesia
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Kartika Selabumi Mining - Indonesia
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- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
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- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- The University of Queensland
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- Bulk Trading Sa - Switzerland
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
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