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, 04 April 12
CHURCHILL MINING TO ACCELERATE INTERNATIONAL ARBITRATION AGAINST INDONESIA
Churchill Mining plc (AIM: CHL), advises that notations on the Indonesian Supreme Court's register of cases shows the Supreme Court has rejected th ...
Monday, 02 April 12
BANGLADESH EYEING INDONESIA FOR COAL
COALspot.com - The high level executives of Center for Environmental and Geographic Information Services (CEGIS) of Bangladesh is visiting Ind ...
Monday, 02 April 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
The first quarter of the New Year ended with the BDI standing 42% above from the 26 years’ bottom low of 662 points on February 1st, and a pos ...
Saturday, 31 March 12
THE BDI CONTINUED TO MOVE UPWARD - VISTAAR
COALspot.com - The BDI continued to move upward and rose by 2.86 pct closing at 934 points.
The cape index was up by 3.14 pct closing at 1,412 po ...
Saturday, 31 March 12
SRI LANKA IMPORTS 152,555 MT OF INDONESIAN COAL IN FEBRUARY
COALspot.com: Indonesia, the world largest coal exporter, shipped 27.126* million tons of coal in February 2012, compared to 28.21* million to ...
|
|
|
Showing 4781 to 4785 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- Ambuja Cements Ltd - India
- Australian Coal Association
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Mercator Lines Limited - India
- Grasim Industreis Ltd - India
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Kumho Petrochemical, South Korea
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Oldendorff Carriers - Singapore
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Directorate Of Revenue Intelligence - India
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- Petron Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- ICICI Bank Limited - India
|
| |
| |
|
