We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Saturday, 22 October 11
WILL THE PROPOSED 26 PERCENT PROFIT SHARING CLAUSE IN THE MINING BILL SPEED UP THE PRODUCTION OR SCARE AWAY INVESTORS? - DIPESH DIPU
.jpg) A draft law has been approved by a ministerial panel headed by Finance Minister Pranab Mukherjee of India which, if passed by the Cabinet, will make it mandatory for the coal producers to share 26 percent of their profits with the population affected by the project. The proposed law has raised objections from the mining industry, fearing that it would result in heavy taxation, which, in turn, would diminish the investments in the sector. However, there are many who are in favour of it, including the largest coal producer, Coal India Ltd.
The mining industry is unique in some sense because of the magnitude of the environmental and social problems associated with this industry. A number of specific characteristics of the mining industry contribute to these problems. Choices of locations are not flexible, so often mining takes place in ecologically and socially sensitive areas. Particularly in those cases, the damage tends to be irreversible. Another characteristic of the mining companies is that they tend to be seen as an economically strategic sector. These two parameters tend to imply a conflict and a risk in terms of corporate accountability. That said, the mining industry has been moving from being a voluntary and marginal contributor to the society—it is part of becoming a partner in social development and making a significant impact on the standard of life for the project affected people. The Mines and Minerals (Development & Regulation) Bill that stipulates that coal mining companies will have to share 26 percent of their net profit for the purpose of the social balancing act. While there cannot be two opinions about compensating the project affected people, the stipulation of 26 percent share of profit does appear steep.
It may have an impact on investment in coal mining sector. And investments in mining ventures should not be viewed in isolation. Any impact on the investment in such a mining venture must consider the micro-economic impact of the venture. It would be stating the obvious that minerals produced from mining ventures are typically consumed in manufacturing sector and the chain of value additions end with the ultimate consumer. In case of a coal mine, the investment in mine is likely to be coupled with investment in power generation, steel or cement. If we take the example of coal mining and power generation, for every Rupee invested in coal mine, typically, five-fold investment goes into power generation plant. This can be enlarged, if the project needs infrastructure investments as well. Similar is the multiplier effect on generation of employment and these projects also help create local business opportunities and employment in these ancillaries. The local business development occurs through the investment in a coal mine and addition of power project in the portfolio, which enhances levels of economic activities and improvement in purchasing power of people in the region.
There is a difference between tax and social contribution, but the mandatory nature of the social contribution can make it appear similar to tax. Currently, coal mining in India attracts following taxes and contributions: Corporate income tax – 33 percent; Royalty – depends on the coal quality/grade; Dead rents – lease rents for land; Corporate social responsibility commitments (percent on revenues) – largely voluntary; Education cess – two percent surcharge; Environment levies – for coal, it is Rupees 50 per tonne of raw coal mined; and Indirect taxes – on consumables. If the 26 percent mandatory profit share is implemented, the taxes and mandatory contributions will account for more than half of the cost of coal production. While costs per se may not be a concern as much as the capacity to pass these costs on to the final consumer, which is where, the industry concerns may lay.
It is observed that raising the level of taxation brings the cash flows forward to the present from its mineral sector, which otherwise is due over time. Reason for this being the observation that tax hike always raises government revenues over the first few years from its promulgation. This is likely to discourage exploration and mine development in the longer run, and so reduces tax revenues on a life cycle basis.
The provision for profit share is likely to have limited success in addressing long-term issues that confront the industry and its investment environment, as hence, the same project affected people. Considering the macro-economic parameters, in long run, the industry and the government, as also the other stakeholders, including project affected people are likely to witness lower realization from a higher imposed contribution required from the mining projects. The provision, as it stands, is likely to erode the attractiveness of coal mining operations and may even act as a deterrent to investments into the marginally profitable coal blocks. It may help that the proposed profit taxes should be dropped in favour of enhanced but fair compensation to project affected people. Fair compensation for the project affected people should be based on earning capacity from that land keeping in view the market conditions for requirement of land. It may be suggested that in addition to compensation for land, the displaced should get annuity for life of the lease period at a rate agreed by the mining company, project affected people and the government.
The above analysis was originally published on Infraline.
The views and opinions / conclusion expressed on this analysis is purely the writers’ own.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors. He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA).
He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Saturday, 15 October 11
BENGAL COAL IMPORT TEST - THE TELEGRAPH
The Telegraph reported that, the power position in Bengal improved today but alarm bells are ringing over imported coal stocks that are running out ...
Friday, 14 October 11
CAPE DERIVATIVES MARKET HAS NOT REFLECTED OWNERS EXPECTATIONS' - FEARNBULK
Handy
The Atlantic market continued its upward trend, with fresh cargo entering the market. Skaw Passero to US Gulf climbed US$ 1500 from la ...
Friday, 14 October 11
ADARO BUYS SERVO MEDA FOR RP200 BIO - INSIDER STORIES
Insider Stories reported that, PT Adaro Energy Tbk (ADRO) announced that its subsidiary PT Alam Tri Abadi (ATI), acquired 35% stake in PT Serv ...
Thursday, 13 October 11
DRY BULK MARKETS RALLY CONTINUES, BUT ANALYSTS WARN IT WILL BE SHORTLIVED - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market continued its push forward yesterday, for yet another session, as the BDI (Baltic Dry Index), the industry’s benchmark edg ...
Wednesday, 12 October 11
INDONESIAS COAL RUSH - JOSEPH KIRSCHKE
COALspot.com - Last winter, the Chinese government mobilized thousands of soldiers and reservists of the People’s Liberation Army to the port ...
|
|
|
Showing 5031 to 5035 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- Eastern Coal Council - USA
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- Central Electricity Authority - India
- Larsen & Toubro Limited - India
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Mintek Dendrill Indonesia
- Ministry of Transport, Egypt
- The University of Queensland
- Pendopo Energi Batubara - Indonesia
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- Star Paper Mills Limited - India
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Independent Power Producers Association of India
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Australian Coal Association
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- PTC India Limited - India
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
|
| |
| |
|
