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Thursday, 05 April 12
COAL EXPORT TAX: MATTER OF CONCERN FOR INDIA - SUNIL K KUMBHAT
 COALspot.com - Since the issuance of Indonesian Mining law in 2009, miners have increased their activities in exploring , exploiting and exporting all types of minerals,specially Black Gold –Coal.
In order to regulate the mining sector , the Goverment of Indonesia has announced a series of new mining regulations, including a ban on exports of some unprocessed metals and low-grade Coal from 2014 , which is designed to spur investment in mineral processing .The proposed ban on exports of coal under the 5,700-kcal/kg from Jan 2014 will change the dynamics of the global thermal coal market, which has seen spiralling 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.
Another Goverment 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.
In a latest move The Goverment of Indonesia now plans to impose a tax of 25% on export of coal and base metals during the current year, and increase it to 50% in 2013. The step is to boost investment in the downstream industry of metal and mining sectors. It is also expected to restrict the exports of mineral and ore metal shipment.The date of implementing the regulation and calculating the Export tax is yet to announced.
Indonesian Government is capitalizing on the mining boom driven by high demand of thermal Coal from China and India . Inspite of series of Taxes , the proposed Export tax is designed to restrict the production and also share profit on the minerals being mined. Coal prices are increasing due to huge requirement and inadequate global production capacity. Govt of Indonesia is encashing the Global situation of demand and supply .Coal will remain hot commodity and Indonesia as heart of Coal Boom.
If the proposed tax is implemented , it is definitely cause of serious concern , particularly for Indian buyers. India is a major buyer of Indonesian thermal coal, along with are China, South Korea, Japan .This is a wake-up call for all the foreign miners operating in Indonesia specially for Coal, that gone are the days of soft and flexible regulations.It is also wake up call for country like India that slow environmental ,forestery clearances and land acquisition issues ,if not sorted out will led to stagnating coal production in India which will resultinto increased dependence on imports, specially from Indnonesia , Australia and south Africa.
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.
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.
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 countries with huge natural resources and exporting thermal 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. Foreign investor is likly to seriouly question the Safety and Security of their investment in mining sector considering the regulations of the recent past. 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).
As the situation stands today next couple of years shall be very challening for foreign companies operating in Mining sector in Indonesia.
The present proposed tax would hit the profits of both domestic and foreign-owned companies and would heavily raise costs for importers.
The market analysts and experts in mining sector are skeptical about all the mining regulations and plans announced in recent past.
By: Sunil K Kumbhat , Jodhpur (Rajasthan) India
Views expressed herein are personal views of the author and not that of COALspot.com.
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Monday, 13 February 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
The current sentiment in the dry market resembles memories from the end of 2008, when the Baltic Dry Index closed at the level of 663 points on Dece ...
Sunday, 12 February 12
INDONESIA HAS ISSUED A REGULATION TO BAN THE EXPORT OF UNPROCESSED MINERALS AND METALS BY 2014
COALspot.com - The Indonesian government has finally issued a ministerial decree (7 Year 2012 dated 6 February 2012) to ban the export of unpro ...
Sunday, 12 February 12
THE BALTIC DRY INDEX CLIMBS 10.51%
COALspot.com - "The markets touched record lows not seen since mid 80’s. However there was some good news with signs of market recovery a ...
Saturday, 11 February 12
A SNAPSHOT ON THE ECONOMIC AND SHIPPING ENVIRONMENT - GOLDEN DESTINY
The week was highlighted with intense worries in the eurozone for Greece to secure its second bailout of $130billion by applying a ...
Saturday, 11 February 12
WILL HISTORY REPEAT ITSELF IN THIS SHIPPING CYCLE? - CLARKSONS / HELLENIC SHIPPING
A slightly dubious "best man" joke runs as follows… Best man (giving his wedding speech): "Have you noticed how history repeat ...
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- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- The University of Queensland
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Indika Energy - Indonesia
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- Economic Council, Georgia
- McConnell Dowell - Australia
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- Latin American Coal - Colombia
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Bayan Resources Tbk. - Indonesia
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Ambuja Cements Ltd - India
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Medco Energi Mining Internasional
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- Star Paper Mills Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
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