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Monday, 12 October 09
INDONESIA TO CUT ROYALTIES TO BOOST LOW QUALITY COAL


Reuters reported that, Indonesia, the world's biggest exporter of thermal coal, plans to cut royalties paid by producers holding certain contracts to attract investment in low-quality coal, a senior government official said on Monday.

Bigger coal producers holding contracts of work have struggled to compete with small producers holding a different contract, a mining authority licence (KP), for low-quality coal as they paid higher royalty, Bambang Setiawan, director general of mining, coal and geothermal at the energy and mines ministry, said.

"When the coal contractors join a tender, they can't compete with smaller producers because they pay higher royalties. So we are thinking of reducing royalties for coal-contract of works producers," Setiawan told reporters at the Coaltrans 3rd Coal Mining Operations and Economics conference in Jakarta.

Producers holding coal-contracts of work, whose output accounts for 80 percent of Indonesia's total coal output, pay a royalty of 13.5 percent for all types of coal.

Under the existing scheme, the government owns 13.5 percent of miners' total coal supplies. Miners have to relay the proceeds of the sale of the coal supplies back to the government.

Smaller producers that hold a mining authority licence (KP) -- a different type of mining permit issued by regional a government -- pay 7 percent royalty for high-quality coal, 5 percent for medium-quality coal and 3 percent for low-quality coal.

Indonesia's coal production is expected to reach 250-258 million tonnes of coal this year, the Indonesia Coal Producers Association has said.
Source:Reuters



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