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Thursday, 08 January 15
INDONESIA PRESSES ON WITH HIGHER COAL ROYALTY FEE TO BOOST STATE REVENUE - JG

The Indonesian government is pressing on with its plan to raise the royalty charged to coal miners in order to increase state revenue, but the move may cripple an industry that is battling with declining coal prices and weak global demand, the Jakarta Globe reported.

The paper said, the coal royalty fee will rise to 7 percent of total sales for coal with calorific content of less than 5,100 kilocalories per kilogram, from 3 percent, said R. Sukhyar, director general of coal and mineral at the Energy and Mineral Resources Ministry, on Tuesday.

Coal with calorific content of between 5,100 kcal/kg and 6,100 kcal/kg will see a 9 percent royalty fee, up from 5 percent now. Coal with more than 6,100 kcal/kg calorific content, will be charged with a 13.5 percent royalty fee, up from 7 percent. Sukhar did not provide the timeline for the increase.

“We are taking this step to boost revenue from the mining sector,” Sukyar said, pointing out that the government missed its revenue target of Rp 39 trillion (approximately US$ 3,079,383,182) in royalty fees last year by 13 percent, or Rp 5 trillion (approximately US$ 394,887,003), as quoted by JG.

This year the government is targeting Rp 40 trillion (approximately US$ 3,159,096,024) from royalties.

The government has been planning to increase the royalty fee since 2013, but miners objected to the plan, citing declining global coal prices that were undermining finances. Coal prices have fallen by about half in the past four years, amid declining demand from countries such as China. Consequently, some Indonesian coal-mining companies have been forced to reduce their workforce, the paper further said.



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