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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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Saturday, 12 November 11
BBJ WILL RELEASE A COAL CONTRACT
Jakarta Futures Exchange will soon release a coal futures contracts during the quarter 1 / 2012.
Director of the Jakarta Futures Exchange (BBJ) S ...
Saturday, 12 November 11
DRY BULK MARKET REGAINS SOME OF THE LOST GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market managed to edge forward yesterday, putting an end and halting the losses accumulated over the course of the past weeks, which ha ...
Friday, 11 November 11
PETROCOM ENERGY PLANS $40M TO BUILD COAL PLANT IN CILEGON - JP
The Jakarta Post reported that, Hong Kong-based Petrocom Energy Ltd has unveiled plans to invest up to US$40 million on a proposed coal-blending fac ...
Friday, 11 November 11
GOVT WAITS LEGAL DECISION ON BUKIT ASAM, ADARO DISPUTE - JP
The Jakarta Post reported that, The government says that it will not interfere in the settlement process of the dispute between state coal miner PT ...
Thursday, 10 November 11
INDONESIAN REFERENCE COAL PRICE FELL AGAIN
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has set the November 2011 Indonesian Coal Reference Price for thermal coal at U ...
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- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Singapore Mercantile Exchange
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Neyveli Lignite Corporation Ltd, - India
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Semirara Mining Corp, Philippines
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
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- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- Kaltim Prima Coal - Indonesia
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Economic Council, Georgia
- Cement Manufacturers Association - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Intertek Mineral Services - Indonesia
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
- Indian Energy Exchange, India
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- CNBM International Corporation - China
- Australian Coal Association
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Eastern Energy - Thailand
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Samtan Co., Ltd - South Korea
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Merrill Lynch Commodities Europe
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- Kartika Selabumi Mining - Indonesia
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- MS Steel International - UAE
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Manunggal Multi Energi - Indonesia
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
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