Acknowledging difficulties encountered by coal miners due to a prolonged drop in prices, Deputy Energy and Mineral Resources Minister Rudi Rubiandini promised on Thursday that the government would provide fiscal incentives to ease the mining companies’ financial problems.
The minister said that the continued fall in coal prices would severely hurt the country’s coal mining companies.
“The government is ready to help by giving tax holidays or with other fiscal measures. The coal mining association has come to us to talk about the issue and asked for help. But we decided that the government would only intervene if the price hit US$60,†he said.
Meanwhile, analysts have forecast that the Indonesian coal mining sector would remain under pressure due to the economic slowdown still affecting the four biggest coal importers countries  China, Japan, South Korea and India  and flooding coal supplies from non-traditional seaborne exporters.
“That is a good idea [to issue a tax holiday]. That means the government cares. But we don’t know whether the idea will be realized or not,†he said.
“Nevertheless, I don’t believe that the price would drop down that far. I guess the price will stay around $90 per ton by the end of this year,†he said.
Japanese steel mills and Australian producers are likely to settle for $160–$170 a ton FOB Australia for the fourth quarter, a sharp drop from the previous quarter but still a premium of $10–$20 above spot prices, producers and traders said.
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