The Indonesian Government is assessing a proposal of increasing royalty on Coal. Government also studying aspects of levying export duty on Coal from next year as the market condition eases.
Indonesian Government working towards better regulation in mining sector as mining is the main source of country’s income. As noted, government has banned exports of raw 14 metallic and 8 non metallic minerals from Jan ’14. However, exports of raw Coal are exempted from such restriction.
Any increase in royalty will surely raise the Indonesian revenue. Currently, different royalty rates are applicable for different mining permit holders and their Coal quantities. For an instance, the companies that mine Coal with IUP license, issued since 2009 with Government Regulation No. 9/2012, have to pay 3-7% royalty as per the Coal quality sold.
Companies having PKP2B license for Coal mining business that predate the IUP must pay 13.5% royalty, which is government planning to equalize & use ones royalty rates for all Coal mining license holders and exerts royalty at 13.5% for all Coal companies.
As the prices of Coal have been slashed drastically and profit margins got thinner already, Coal companies have opposed for any increase in royalties.
Government is re-assessing their plans to increase Coal royalties and involve mining players in the mapping & refining, as a win-win solution.
Indonesia has produced around 421 MnT Coal in 2013 and expecting its production to remain almost at the same level around 424 MnT. In starting of year, government lowered the Coal production targets at 397 MnT.
Indonesian Government also looking forward to curb illegal mining by restricting Coal loading ports. Indonesia has plenty of barge loading ports and anchorage loading points to support Coal loading in Kalimantan & Sumatera Island.
Leave a Reply