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Monday, 16 February 15
COAL MINING SLUMP A BLESSING IN DISGUISE - THE JAKARTA POST
 The growth of the coal-mining industry, which has diminished in the last two years, is expected to slump even further this year following weakening demand for coal in the world market. This has been worsened by the more recent tumbling price of oil as the world’s main source of energy, which has discouraged the conversion of energy use from oil to coal.
The diminishing growth of the coal-mining sector has contributed to a decline in government revenue over the last two years. Since coal has become Indonesia’s major export commodity, the weakening of coal exports has resulted in a declining trade performance of Indonesia’s non-oil and gas sector, and in turn, contributed to an overall trade deficit in the past three years.
However, the diminishing shine of the coal industry has its bright side. This is because the increasing amount of coal-mining activity in the past decade has not only resulted in serious environmental degradation, but also enhanced the proliferation of corrupt and clientelistic practices in the regions.
The previous rapid growth in coal demand not only benefited large coal-mining firms, but also increased the escalation and dispersion of small-scale coal mining activities, particularly after the decentralization of the coal sector in 2009. Law No.4/2009 on mineral and coal mining grants the province and district governments new authorities for issuing coal mining licenses for Indonesian companies, cooperatives or individuals, which covers an area of less than 50,000 hectares.
Since then, the magnitude of small-scale coal mining activities has increased tremendously. The Energy and Mineral Resources Ministry records that 9,662 permits were issued for small-scale coal mining by regencies as of 2011. Of these permits, only 3,778 were supported with the necessary documents without any outstanding legal issues.
Local governments have benefited from these mining operations through accepting large royalty payments from miners. In some coal-rich regencies, the revenues generated from coal royalties can be worth several times more than the contributions made by land and building taxes. The high profitability of small-scale coal mining has encouraged many regencies to allow these mining operations to operate without considering their detrimental impacts on the environment and the surrounding communities.
Many of these small open-pit coal mines are near residential areas, polluting rice fields and fish ponds and triggering landslides and floods.
Besides being an important source of local government revenue, coal has also become a source of funds for certain political groups close to local governments. Those who can obtain small-scale mining licenses in the regions are usually those who have some special or familial relationship with local government leaders, or are in some way connected to certain powerful local councilors.
Due to the high-cost politics associated with the direct elections of local government leaders since 2005, the money generated from small-scale coal mining activities has become an important source of political funding for government and political leaders participating in elections. An incumbent from a ruling political party can generate funds for a political campaign by developing a coal-mining business or issuing coal-mining licenses.
Apart from its high profitability, local politicians’ attraction to coal mining businesses is also due to the quick returns on investment compared to other booming commodities, such as palm oil. The quick returns generated by coal mining is very important for local politicians, who need to mobilize assets in anticipation of the local elections conducted every five years.
This high-cost politics and the local government’s lack of accountability have also provided a favorable environment for business actors and brokers to take advantage of the situation. Businessmen in the coal industry have often provided financial backing for the candidates for local government and legislative leaders who they think have a high chance of winning in the local elections, known as pilkada.
In exchange for financial backing, businessmen expect to gain rewards in the form of projects or certain policies in favor of their coal-mining business from the candidates they support, should they win the election.
Although the 2009 mining regulation has given greater opportunity for locals to obtain a mining permit, many have been reluctant to apply for a permit due to complications and bureaucratic red-tape in the processing of mining licenses. As a result, many locals choose to engage in illegal mining activities, frequently also supported by business actors, who serve as the financial backers and collectors of the coal extracted by local people.
These illegal activities have resulted in the extraction of millions of tons of coal per annum during its peak period.
Considering the serious problems resulting from the escalation and dispersion of coal-mining operations in the regions, the industry’s current downturn is a blessing in disguise. Weakening of coal demand has forced many coal-mining firms, particularly the illegal ones and the small- and medium-sized ones, to cease their operations.
This substantial reduction of coal-mining has reduced the frantic pace of exploitation and slowed environmental degradation in the last few years, which usually involves corrupt and clientelistic cooperation between businesses, government and political actors.
Nevertheless, if the government shows little concern for accountability and does not strengthen monitoring mechanisms overseeing the implementation of coal-sector decentralization, corrupt and clientelistic practices that have triggered rapid and careless coal exploitation will likely re-flourish once the demand for the commodity recovers. And undoubtedly, this condition is not only applicable to coal mining, but also to any other lucrative industry in Indonesia.
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The writer is the research director at the Center of Reform on Economics (CORE) Indonesia, Jakarta
Source: The Jakarta Post
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Friday, 30 January 15
CAN BULKER CONVERSIONS SPOIL THE TANKER MARKET'S PARTY? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Oversupply of tonnage has always been in the back of the head of ship owners when it comes to taking advantage of favorable market conditions. As s ...
Thursday, 29 January 15
CHINA ENERGY DEMAND MUST BE REVIEWED DUE TO FUNDAMENTAL ECONOMIC CHANGES - WOOD MACKENZIE
New patterns emerging as energy demand growth decoupled significantly from GDP growth for the first time in 2014
Wood Mackenzie says 2014 was ...
Thursday, 29 January 15
CAPE MARKET IS STILL STRUGGLING WITH LOW DEMAND AND LOW COMMODITY PRICES
Handy
Supramax rates are heading south with slipping rates all across the block. USG activity is slow with mid-week levels in the mid 8.000s, Fea ...
Wednesday, 28 January 15
MARKET INSIGHT - STELIOS KOLLINTZAS
With most traders having returned to action from year end festivities, we have already seen signs of activity in the specialized product markets. L ...
Wednesday, 28 January 15
CAPES CONTINUED THEIR UPWARD MOVEMENT LAST WEEK - INTERMODAL
COALspot.com: The Dry Bulk market displayed a mirror performance of that of the week prior, with the Capesize market correcting further upwards and ...
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- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- The University of Queensland
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- Tamil Nadu electricity Board
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Planning Commission, India
- Mjunction Services Limited - India
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Latin American Coal - Colombia
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Neyveli Lignite Corporation Ltd, - India
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- MS Steel International - UAE
- ICICI Bank Limited - India
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
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