The government's plan to raise royalties and export duties on coal will likely to control illegal mining.
Illegal coal production currently stands at around 56 MnT with state losses estimated at 3.4 trillion rupiah (RM1 billion)to 5.5 trillion rupiah (RM1.6 billion) per year.noted that the recent slump in global coal prices is also inseparable from the glut of illegal coal in the global market.
According to the association's research, more than five trillion rupiah (RM1.5 billion) was lost last year because illegal coal miners did not pay income tax, value-added tax, and royalties to the state.
As an alternative to coal export duties, the government should actively control illegal mining, apply royalty tariffs based on a given price index, and provide incentives to coal companies to support national energy security.
Meanwhile, the government is considering imposing coal export duties next year to boost royalties and to conserve the non-renewable fossil fuel, the Energy and Mineral Resources Minister's special staff said on Tuesday.
He noted that the government wanted to control the use of the nation's natural resources, including coal.
The government is considering imposing export duties on coal following a similar action on minerals.In accordance with Law No 4 of 2009 on Minerals and Coal, with effect from January 2014, minerals must be processed at home before being exported.
However, the law does not mandate that coal exports be subject to duty.
The government has projected that coal royalties from mining business permit (IUP) holders – small and medium scale mining companies – will rise by 10-13.5% of current selling prices from January 2014 onward.
Open pits with coal below 5.1 thousand kcal/kg are expected to account for close to 10% of the royalties, while royalties from open pits with 5.1 thousand to six thousand kcal/kg coal and less than 6.1 thousand kcal/kg coal are projected to reach 12% and 13.5%, respectively.
Meanwhile, royalties from joint coal-mining contractors (PKP2B) remains fixed at 13.5% of the selling price
Although demand for Indonesian coal is very high, if the government insists on imposing duties on coal exports, the state's losses may increase even further, the plan to impose such duties ran counter to the law.
– Sourced
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