(Feb 4): Some of Indonesia’s biggest coal miners have been spared from cuts to production quotas set by the government, leaving much of the burden to fall on smaller firms.
PT Bumi Resources, PT Adaro Andalan Indonesia and PT Indika Energy have all received their full requests for coal mining quota this year, totalling about 170 million tonnes, according to people familiar with the matter who asked not to be named disclosing private information. The companies hold special mining contracts, known as IUPKs, which pay higher royalties to the government.
Indonesia, the world’s biggest exporter of power station coal, is looking to slash output by nearly a quarter this year to around 600 million tonnes in an attempt to boost prices. The Indonesian Coal Miners Association said last week the cuts for individual miners would be from 40% to 70%, and warned that may make some operations uneconomic, potentially leading to massive layoffs and defaults on loans.
The smaller miners may be less able to bear the costs of reducing production. The industry is already facing its toughest conditions in years, with the government looking to levy large fines on operations deemed to have breached their forestry permits. Indonesia is also looking to impose an export tax on coal, which would further undercut profits.
Coal remains critical to Southeast Asia’s largest economy, with mining concentrated in Kalimantan and Sumatra. The industry is estimated to employ between 250,000 and 400,000 workers, according to a report last year from the Energy Shift Institute.
A spokesperson at Bumi declined to comment, while spokespeople at Adaro and Indika didn’t respond to messages seeking comment.
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Uploaded by Magessan Varatharaja
