Indonesian coal exports suffer new rules

Indonesia’s coal exports are expected to decline due to new administrative protocols to come into effect today.

 

October exports may fall by between 15 and 20 per cent on the September figures, and by 5 per cent for the year, as companies attempt to obtain export permits demanded by new regulations.

New regulations, designed to retain coal for domestic power generation and reduce illegal mining, require that coal mining companies must have approval from the Indonesian mining and trade ministries in order to export product.

This has resulted in a backlog of applications, causing delays which have left companies unregistered to ship coal from October 1.

Pandu Sjahrir, chairman of the commercial committee at the Indonesian Coal Mining Association (ICMA), said the backlog was occurring in the Coal and Minerals Directorate, where companies required signatures from each of the directors.

“Everything has to be done manually,” he said.

“A couple of the major firms haven’t completed registration.”

Coal and Minerals director-general R. Sukhyar said it was a certainty that production would slow because of the backlog, with delays due for the next month.

“We have to look at a number (of firms) that have applied. I think hundreds of them are still in my office,” he said.

The Indonesian government is currently taking stock of renegotiating hundreds of licences and contracts with mining companies to examine overlapping permits and unpaid taxes and royalties.

Sukhyar said 171 mining permits had been annulled in 2014, many of which were in production, in order to increase governance in the mining sector.

Even Indonesia’s top coal producer Bumi Resources had failed to register the unit PT Arumin to to unpaid royalties.

The potential drop in exports may influence investor confidence in Indonesia, with the 5 per cent drop valued at a potential 2 billion per month, which could increase the Indonesian current account deficit.