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A zoning law could cost coal miners billions of dollars this year alone, hurt investment in the industry and disrupt the supply of the fuel to the country’s power plants when the law’s implementing regulations come into effect in April, the Indonesian Coal Producers Association warned on Monday.

Bob Kamandanu, chairman of the association, also known as the APBI, said its members stood to lose at least $3.2 billion this year, based on last year’s average coal price of $50 per ton, and that total production would decline by 25 percent. He said the law would force many operators to shut down because their permits would not be extended, while existing ones could be revoked.

However, Deputy Minister of Public Works Hermanto Dardak told the Jakarta Globe that any mining companies that have been operating according to existing regulations should have nothing to worry about.

“I think the new law is ideal for the country as Indonesia still experiences many violations of spatial zoning,” Hermanto said. “If a mining company has just realized they’re committing activities that violate the zoning law, then they should talk with the local governments and the Forestry Ministry to determine what needs to be done to adjust to the regulation.”

The 2007 zoning law was initiated by the Public Works Ministry to create a more comprehensive zoning system governing land use in the country. It prohibits coal mining in some forested areas.

However, coal producers said they were unaware of the law’s existence until December, when their applications for extensions of their land-use permits began to be stalled or rejected.

“[The law] is retroactive. Therefore, it could cause a massive negative impact on the industry as more than 90 percent of its operations are in forested areas,” Bob said.

The APBI also claimed that the law has created confusion at the Forestry Ministry, resulting in a general reluctance to issue any permits because of fears that the issuers could face criminal prosecution if they inadvertently violated the zoning regulation.

The Energy Ministry confirmed last week that operations at the Jorong coal mine in South Kalimantan owned by PT Indo Tambangraya Mega, the country’s fourth-biggest coal miner, had been shut down by police because the company lacked the proper land-use permit.

“A unit of PT Tambang Batubara Bukit Asam, PT Bukit Kendi, has also been closed due to the same problem,” Bob said, adding that other companies had received notice that they should be prepared to shut their operations at some mines if their permits were not approved.

“The association and its members are currently seeking legal advisers to know whether the coal companies could operate within the law or not. We will seek a judicial review with the Constitutional Court if we can’t work under the law,” Bob said.

Indonesia, Asia’s biggest exporter of coal, is expected to produce 280 million tons this year, a 12 percent increase from last year. Coal exports in 2009 totaled $14.85 billion.