Coal news and updates

The government is considering imposing a tax on coal exports next year, particularly for small miners who earned contracts after the issuance of the 2009 Mining Law.

 

The Energy and Mineral Resources Ministry’s special staff, Thabrani Alwi, said the scheme was aimed at avoiding overexploitation as the country was shifting to fossil-based fuel as its major energy source.

 

“After imposing a tax on mineral ore exports, we are now considering implementing the scheme for coal exports as well. It is either imposing the [export] tax or increasing royalties,” he said on Tuesday.

 

Earlier this year, the ministry said the government had planned to increase the royalties miners would be required to pay from the current 5 to 7 percent of net sales to 13.5 percent. This would apply to coal miners with contracts issued after 2009.

 

The contracts issued after the enactment of the 2009 Mining Law mostly went to small or new coal miners. 

 

These smaller and newer mining companies pay their royalties based on the calorific value of the coal they produce — a higher quality of coal means a higher royalty rate.

 

The royalty rate for coal with a calorie content of less than 5,100 kilocalorie per kilogram (kCal/kg), for example, is 3 percent of net sales. Coal with a calorific value between 5,100 kCal/kg and 6,100 kCal/kg has a rate of 5 percent of net sales while a 7 percent rate has been implemented for coal with a calorific value of more than 6,100 kCal/kg.

 

Coal mining companies with a PKP2B, or licenses granted before the issuance the 2009 Mining Law, have been paying 13.5 percent in royalties for both lower-ranking and high-ranking coal.

 

According to Thabrani, the ministry is currently mulling imposing an export tax on coal miners instead of increasing the royalty percentages. Indonesia currently applies a 20 percent export tax for raw mineral ores. 

 

“We will meet with the Indonesian Coal Mining Association [ICMA] this week,” he said.

 

In 2012, Indonesia produced 386 million tons of thermal coal, 9 percent higher than the initial target of 353 million tons or 4 percent higher than the 370 million tons it produced a year earlier, according to data from the ministry.

 

The government last year received Rp 20.8 trillion in non-tax revenue from the mining sector, down 14 percent from the Rp 24.2 trillion in non-tax revenue the government received in 2011.

 

Indonesia aims to produce 391 million tons of thermal coal this year and expects to receive Rp 29.9 trillion in non-tax revenue. 

 

The country produced 99 million tons of coal in the first three months of this year, according to government data.

 

Meanwhile, the ministry on Tuesday announced that the country had raised its benchmark coal price in September. Coal with a gross heating value of 6,322 kCal/kg will cost US$76.89 per metric ton, a 0.25 percent increase from $76.70 a ton in August.

 

 

 

Source: Jakarta post