We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Friday, 09 March 12
MINING IN INDONESIA: RESTRICTION ON FOREIGN INVESTMENT - SUNIL K KUMBHAT
 COALspot.com - Recently Govt has passed regulation instructing foreign mining companies to reduce their ownership stake.
The regulation known as GR 24 of 2012 ( Amendment of GR 23 of 2010 ), signed by President of Indonesia on Feb. 21,2012 stipulates that foreign shareholders/ Companies must gradually divest 51 percent of their shares in local mining companies to local investors after the fifth year of commercial production and complete the divestment by the 10th year of production. The divestment regulation resulted from a revision to a earlier GR 23 of 2010 that required foreign shareholders in local mineral and coal mining companies to divest 20 percent of their holdings.
The Director general for minerals and coals, said the regulation would not directly apply to contracts made prior to the issuance of the regulation , but so far no clarification in writing.
Local investors were defined by the regulation as the:
1.Central government,
2.Provincial , regency or municipal governments,
3.State-owned enterprises,
4.Regional enterprises and
5.National private companies.
The disinvestment shares are to be offered to entities in the order of priority listed above by way of auction.
Under the new requirement, mining companies must divest a total of 20 percent of their foreign shares from 6th year of starting production, 30 percent by the seventh year, 37 percent by the eighth year, 44 percent by the ninth year and 51 percent by the 10th year.
Prior to the issueance of GR 24/2012 , Mining Licences (IUP's) could not be transferred or assigned from one entity to another but GR 24/2012 provides that an Mining Licence may be transferred to another entity on the basis that the transferor holds a minimum of 51% of the shares in the assignee.
It effectively means foreigners are going to lose control after 10 years. Mining Sector is a capital intensive, risky , Complicated and time consuming business to invest in. By passing regulation and forcing foreign companies to divest within a fixed time frame and drastically changing the mining regulations is likely to discourage the interest of potential foreign investors to invest in the Mining Sector.
Historically, major foreign backed mining projects in Indonesia have been developed under contract based concessions - Contracts of Work (CoW) and Coal Contracts of work( CCoW )- entered into directly with the Government. These contracts covered the life of the project and larger areas than the new licence regime and were seen as a more secure regime , having economic and fiscal terms agreed in a contract that formed a "special law" between the Government and the mining company. In broad perspective such major changes in Govt regulations and increasing uncertainty and shift in foreign investment policy in the mining sector may consequently impact investment interest in other sector also.
The government is currently renegotiating all its contracts with CoW / CCoW mining companies across the nation in compliance with provisions of the 2009 Minerals and Coal Law.
The regulation would act as a disincentive for mining companies as five years is too short period to begin divestment, given that firms typically had 8 to 10 years to repay bank loans. If they have to divest 51% within 10 years, they are not yet reaching the break-even point of their investment.
Indonesia ,southeast Asia’s largest economy contains some of the world’s richest mineral deposits, such as the Freeport-run Grasberg, the world’s largest gold mine, and its fast-growing mining sector accounts for about 10-11 percent of GDP. The new regulation is the latest government move to extract higher domestic profit from the vast mineral wealth in the world’s top exporter of thermal coal and other minerals like tin , nickel, copper , Bauxite etc. But the change in regulation may deter foreign investment in mining sector.
The 2009 mining law was aimed at boosting investment in mining and metals processing, but its supporting regulations have not gone down well with the industry, and new investors still face risks such as policy reversals, local community demands, a tortuous permit process and poor infrastructure.
The latest regulation stipulating foreign ownership in Indonesia’s mining industry is bound to upset foreign investors and cheer local companies. The ruling will limit foreign companies from owning more than 49 percent of some mines, potentially limiting investments in a fast-growing sector.
Under the new regulation, foreign holders/ Companies of mining licenses in Indonesia , will have to cut their stakes to 49 percent at most within 10 years of starting production. Many foreign investors have already expressed grave concerns over this new ruling, arguing that mining is a capital-intensive industry and requires a long payback period.
Under the new ruling, foreign owners’ coal and minerals assets would required to sell the shares to the central and regional governments, state-owned companies or local private companies. This is itself not new, but the new time frame means that investors will not have enough time to recoup their investments, let alone make a profit.
Any country and Indonesia in this particular issue has every right to dictate the terms and conditions for foreign investors who wish to invest in the country. Many other countries also protect their local businesses, and it is the government’s duty to ensure that its own citizens benefit from the nation’s natural wealth.
Foreign investors often take huge risks and invest billions of dollars before they see returns. Their risk-taking allows the mining sector to grow and develop; without them, the country will be worse off. They have a right to expect a reasonable return on their investment, too.
The regulation had been promulgated with good intentions to empower local companies and boost their involvement in the mining industry.
But a balance must be struck between the two goals: attracting foreign investments and ensuring local communities also benefit. By requiring foreign shareholders to sell their stakes in mining assets to local entities, the government is attempting to strike this balance. The key issue is proper calibration of risk and reward ,considering the law of the land.
In spite of the fact that Mining sector in Indonesia is overregulated and lot of uncertainties ,the mining sector will remain most hot sector and cannot be ignored. There is always cost of doing business in Indonesia.
By : Sunil K Kumbhat , Jodhpur( Rajasthan ) India
Views expressed herein are personal views of the author and not that of COALspot.com.
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Wednesday, 11 April 12
TWO PERCENT OF IBP CONCESSION CONTAINS 42 MMT OF COAL
COALspot.com - 42.35 million ton of coal found in just 2% of PT Insani Bara Perkasa’s total concession area of 24,477 hectare.
Accord ...
Wednesday, 11 April 12
DRY BULK MARKET STILL SUBDUED, RECOVERY NOT YET SEEN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market entered the new week after the past days of easter holidays in western countries in a subdued mood. The industry’s benchma ...
Monday, 09 April 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
The first week of April ended with the Baltic Dry Index falling below 950 points, before Catholic Easter, and capesizes showing a modest upturn with ...
Sunday, 08 April 12
CHARTER RATES COULD CONTINUE TO BE SOFT NEXT WEEK - VISTAAR
COALspot.com - The BDI was almost at same levels closing slightly lower by 0.64 pct at 928 points.
The Cape index was up by 6.73 pct closing at ...
Friday, 06 April 12
INDONESIAN HBA FALL TO LOWEST LEVEL SINCE JANUARY 2011
COALspot.com - Indonesian HBA fall to lowest level since January 2011 this month. The monthly coal reference price for coal sales in April fal ...
|
|
|
Showing 4771 to 4775 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- The University of Queensland
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- Parliament of New Zealand
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- Bhushan Steel Limited - India
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Marubeni Corporation - India
- MS Steel International - UAE
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- PetroVietnam Power Coal Import and Supply Company
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- Medco Energi Mining Internasional
- Global Green Power PLC Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Kepco SPC Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
|
| |
| |
|
