Coal Executives Hold Their Breath on Govt’s Latest Plan
Indonesian business and industry groups have called for calm following statements from government officials that Indonesia was planning to curb coal exports and was also considering a tax on shipments of the mineral.
Speaking at the Coaltrans conference in Bali, Energy and Minerals Minister Jero Wacik said on Monday that the country needed to conserve coal for domestic use.
“Indonesia’s need for coal will increase strongly, so exports will need to be controlled,” Wacik was quoted by Reuters as saying. He did not give further details.
The statement contributed to the decline of coal stock on the Indonesia Stock Exchange on Monday, with the mining sector falling almost 8 percent.
“Coal miners lost a lot [on Monday],” said Bertrand Raynaldi, the head of research at eTrading Securities in Jakarta. “The business prospect itself is not very good, with commodity prices continually declining. There is also the issue about coal-export tax that is still very unclear.”
Bumi Resources, the country’s biggest coal miner by tonnage, saw its stock fall 14 percent to Rp 1,220, while state-controlled coal producer Tambang Batubara Bukit Asam slid 12 percent to Rp 13,250.
Indonesia, one the biggest thermal coal exporters in the world, recently announced a levy of 20 percent tax on exports of 65 unprocessed minerals, including copper and gold but leaving out coal.
But Dileep Srivastava, a director at Bumi Resources, one of Indonesia’s largest coal miners, said it was too early to draw any conclusions from the statement.
“Let’s not speculate when market sentiment is already depressed,” he said.
Supriatna Suhala, the executive director of the Indonesian Coal Mining Association (APBI), said that if the government wanted to impose an export tax on coal, it was unlikely to happen soon.
“It is not happening this year,” Supriatna said.
The APBI groups the country’s coal miners and mining services firms, including Adaro Indonesia, Kaltim Prima Coal, Arutmin Indonesia, Berau Coal and Tambang Batubara Bukit Asam.
But Supriatna added that the government needed to streamline all the rulings affecting the country’s coal industry before imposing any new ones.
“There are a lot of technical problems that need to be smoothed out before the government can impose the tax,” the APBI official said.
He pointed to what he called inconsistencies in contracts given to coal miners in terms of work, royalties and taxation. He added that the government had to everything it could to make a level playing field.
Companies are reportedly paying different amounts in royalties and taxes.
Supriatna claimed Bumi was among the highest taxed companies in the world, far more than counterparts in much of the metals or resource space.
Ray Gunara, president director of coal miner Harum Energy, said in a recent meeting in Jakarta that his company was already paying a 13.5 percent royalty.
“Is [a 20 percent additional tax] feasible?” he asked.
“Companies will see if it will leave enough margin for them. Fuel cost is not declining, so we are not exactly seeing a way for us to reduce costs.”