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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, 22 November 11
NTPC TO BUY 2 MMT OF IMPORTED COAL FOR ITS FOUR PLANTS
COALspot.com - NTPC Limited, incorporated in 1975 as a public sector company wholly owned by Government of India, the largest thermal power generati ...
Tuesday, 22 November 11
ABM INVESTAMA SETS IPO AT RP 3,750
Insider Stories reported that, Integrated energy company PT ABM Investama Tbk has determined the IPO price at Rp3,750 (approximately US$ 0.415) per ...
Tuesday, 22 November 11
A SURPRISINGLY STRONG WEEK FOR THE CAPES - BRS
Positive gains for most of the segments this week, the exception being the Handysizes. Overall the BDI ended the week at 1,895 points (+3.3% week-on ...
Tuesday, 22 November 11
APPETITE FOR DRY BULK VESSELS SLOWS DOWN AT THE START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was down at the beginning of the week, as demand for Capesize vessels was particularly low. The industry’s benchmark, the ...
Monday, 21 November 11
CAPESIZES DRIVE MARKET LOWER, ANALYSTS DIVIDED ON DRY BULK OUTLOOK IN THE LONG RUN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market ended the week on a sour note, with the industry’s benchmark heading downwards to 1,895 points, which represented a slight ...
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- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- The Treasury - Australian Government
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Planning Commission, India
- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- SMG Consultants - Indonesia
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Merrill Lynch Commodities Europe
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Indian Energy Exchange, India
- ASAPP Information Group - India
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- White Energy Company Limited
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Formosa Plastics Group - Taiwan
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Vizag Seaport Private Limited - India
- Australian Coal Association
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Mines - Canada
- Kartika Selabumi Mining - Indonesia
- Bangladesh Power Developement Board
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
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