RI seeks to increase coal production to bolster revenue

Indonesia expects to increase coal production by up to 20 million tons next year as lawmakers insist that the government must book higher non-tax revenue from the mining sector in 2010. 

Bambang Setiawan, the director general for coal, minerals, and geothermal at the Energy and Mineral Resources Ministry, said the House of Representatives' budget committee had asked the government to set a non-tax revenue target of Rp 15 trillion (US$1.48 billion) from the mining sector in 2010.

"The government *had* earlier proposed the revenue at Rp 14 trillion, which is unchanged from this year's target.

"But, as the House's budget committee want the revenue to be Rp 15 trillion, we expect that next year we can slightly increase the production," Bambang said Thursday.

Coal and other mining commodities contribute to non-tax state revenue mainly through royalty payments. Coal contributes the biggest single contribution to state revenues from mining commodities.

The royalty payments will then be shared between the central and regional governments involved.

For this year, the country expects to produce 230 million tons of coal.

"If we want to secure the Rp 15 trillion revenue next year, we must increase coal production by between 10 million and 20 million tons. This is based on the assumption that the coal price is still unchanged from the current price of US$63 per ton," Bambang said.

"We hope that the production can be increased and the demand will be high next year so that the revenue target can be achieved," he said.

Bob Kamandanu, chairman of the Indonesian Coal Producers Association (APBI), said the target was "not too extreme" and achievable.

"This should be achievable, because last year the production was 239 million tons and this year it could be somewhere between 245 and 250 million tons. Thus the target of 260 million tons for next year will not be too difficult," he said.
The country's coal production has already reached 72 million tons in the first half of this year, according to data from the energy and mineral resources ministry. 
In the same period, the coal sales volume reached 75 million tons; 52 million tons being sold to domestic buyers and the remaining 23 million tons going to exports.
The mining sector in total has booked non-tax revenue amounting to Rp 7.2 trillion in the first half of 2009, just under half of the annual target now set by the House of Representatives budget committee.
Source:Alfian , The Jakarta Post , Jakarta | Fri, 08/28/2009 4:00 PM | Business 

Coal output to rise in H2 but exports to go flat

The Jakarta Post , Jakarta | Tue, 08/25/2009 1:02 PM | Business

It is estimated coal production will rise by 5.7 percent in the second semester from a year earlier, to bring full-year output growth to around 5 percent, although exports will remain stagnant on slightly slower demand, an industry grouping says. In the first half of the year, coal production reached 122 million tons or about 4.2 percent higher than the same period last year, according to the Indonesian Coal Mining Association (APBI). 

For the July-December period, APBI chairman Bob Kamandanu, said that the country's total production may increase by 5.7 percent to 128 million tons, from 121 million tons in the same period last year.

The increase, he said, was because the largest players in the industry increased production. The largest players in the industry include PT Bumi Resources, PT Adaro Indonesia, PT Kideco Jaya Agung, PT Berau Coal and PT Bukit Asam.

While production is rising, exports are predicted to remain relatively flat, close to the level of 160 million tons.

Bob said that declining demand from overseas industries, as they reduced their coal imports, mostly due to the global economic crisis, was the reason behind the stagnation in the country's coal exports.

"Companies from the export destination countries requested to reduce their imports by between 10 percent and 20 percent earlier this year," he said, adding that China might reduce its coal imports by 5 percent this year.

Therefore, the association expects a minor growth in exports this year, only by between 2 percent and 3 percent, to between 163.2 million and 164.8 million tons, from 160 million tons last year.
Domestic consumption meanwhile is expected to increase by 15.38 percent to 90 million tons this year, from 78 million tons last year. He said domestic demand, showing a different pattern from exports, was still dominated by industries, such as the State Electricity Company (PLN) and coal-fired power stations like PT Paiton Energy. 
Domestic coal prices averaged around Rp 600,000 per ton depending on its quality, up 18.28 percent from Rp 507,240 per ton last year, he said.
Source: http://www.thejakartapost.com/

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