Low Coal Prices Force Layoffs at Three Small-Scale Miners in E. Kalimantan
Tenggarong, East Kalimantan. Bad news continues to flow from East Kalimantan as three small-scale coal miners reported more than 200 layoffs to the Labor Ministry’s local office, with many more coal producers expected to make similar cost-cutting measures.
VPR Laxmindo laid off 54 workers, while 100 were given pink slips at SIP and 50 at Cipta Kridatama, as the declining price of coal in recent months has squeezed operating budgets.
“The three companies are [a few] of more than 430 coal companies in one small district,” Panut, the head of industrial relations at the Labor Ministry office in Kutai Kertanegara district, said on Friday.
Panut said other companies, which he declined to identify, have suspended production — unable to afford labor costs with the price of the commodity having fallen by about one-third from a year ago.
Panut said his office would hold a meeting on Wednesday with coal miners to discuss possible severance payouts and to seek ways to avoid further layoffs.
Suriansyah, head of the labor office in Kutai Kertanegara, said on Wednesday that some coal miners operating in various districts of East Kalimantan were anticipating massive layoffs in the coming weeks.
East Kalimantan is home to 14 districts — including Balikpapan, Bontang and Tarakan — that are rich in natural resources such as oil, gas and coal.
There are more than 400 small-scale miners operating in Kutai Kertanegara district alone, employing more than 40,000 workers. Workers in coal-mining related and supporting businesses totaled 300,000 people this year.
Panut said that a laborer working directly in coal mining had typically earned Rp 5 million ($525) to Rp 6 million per month. But as the price of the commodity has dropped, laborers have seen their salaries reduced to a range of Rp 1 million to Rp 2 million, with benefits and overtime pay on the chopping block.
According to data from the local Energy and Mineral Resources Ministry office, coal production from a sampling of about 71 small-scale coal miners has fallen to 5.2 million metric tons in the second quarter this year, way below the 9.4 million tons recorded in the first quarter.
Sudarsono Wira Adi, a government official from the local office of the Energy Ministry, said the slumping global economy has caused demand for the commodity from China and India, two of Asia’s largest consumers of thermal coal, to fall.
“We are hit by that,” Sudarsono said.
Sudarsono said that coal production from East Kalimantan accounts for around 60 percent of the country’s total production per year, or about 200 million tons.
Indonesia is the world’s second-biggest shipper of thermal coal, with 20.8 billion tons of proven coal reserves, according to the Energy Ministry.
Resource-rich Kalimantan island is home to four provinces including East Kalimantan. The other three provinces are Central Kalimantan, West Kalimantan and South Kalimantan.
Several big coal producers such as Bumi Resources, Kaltim Prima Coal and Harum Energy operate coal mining plants in Kalimantan.