• Indonesian coal exporters face second regulatory hurdle

    Indonesian coal exporters face second regulatory hurdle
    Friday, 21 February

    Indonesian thermal coal exporters are now required to produce a certificate clearing the miner to produce coal before they ship material overseas, a government official said.

    The latest move is the second regulatory obstacle encountered by Indonesian coal exporters this year.

    Last month, several coal shipments were delayed due to the strict enforcement of a regulation requiring exporters to produce a IUP-OPK license, which allows them to trade and transport coal.

    Gultom Guska, deputy coal director of the energy ministry’s directorate for mineral and coal, said the latest regulation, one of scores due for implementation under the 2009 mining law, was issued by energy minister Jero Wacik in December.

    The regulation stipulates that Indonesian thermal coal exporters should present a “clean and clear” certification of the producing coal mine before they are allowed to ship out their cargoes.

    A huge percentage of Indonesian miners are unaware that they need to individually secure the certifications, although they might already figure in a list of firms that have been cleared to produce coal, a small coal producer at Central Kalimantan province said.

    Only about 30 to 40 companies, mostly major coal producers, have so far secured the certification, market sources said.

    A junior energy ministry official said Indonesia has cleared about 2,500 miners to produce coal as of January but a majority of them has yet to apply for the certification. The list is regularly reviewed and re-issued.

    Issued by the central government, the certification is an indication that the mine has no outstanding royalty and other government debt obligation, has fulfilled its exploration and environmental commitments, has no property delineation issues and has obtained forestry permits, Guska said.


    Guska said mining companies are strongly urged to secure the individual certification to avoid any export delays.

    The Central Kalimantan coal producer said he was able to obtain his company’s clean and clear certification last year within two months of applying.

    He said it may take longer now considering the avalanche of applications seeking certification.

    Sources said the ruling would facilitate the collection of coal taxes and royalties and would also help prevent illegal coal exports.

    A Sydney-based mining consultant estimated that about 5-15 million mt of coal are illegally produced in Indonesia annually, while an energy ministry source put the figures at about 50 million mt.

    While it is within the Indonesian government’s bounds to ensure it is not robbed of earnings from its resources, certain market sources have expressed concern about bureaucratic delays in obtaining the certification, as well as the prevailing confusion among authorities implementing it.

    “It is already a ‘must.’ My only concern is there is not enough advance notice about the ruling,” the Central Kalimantan coal producer said.

    An Indonesia-based trader said the ruling should not be a concern if the coal being sold is produced legally by Indonesian miners who are dutiful in their fiscal obligations.

    He said the ruling would not affect the ability of miners to produce coal but may cause shipment delays if miners or traders do not produce the certificates to authorities.


    A second mid-sized coal producer in South Kalimantan said that certain private inspectorate firms were now cautious about issuing survey reports as required by Indonesian customs.

    A second Indonesia-based trader said trading firms buying coal from different mines would now have to go through the process of securing certifications of several miners before being able to do business.

    No such certification was previously required. There are instances when traders would have to source coal from four or five different mines to load a Panamax vessel and in such cases they will now have to secure certifications from all the mines that they source coal from before the vessel is allowed to sail, the trader said.
    Indonesia has been introducing policy changes in its mining sector which is unsettling investors and importers of the country’s mineral resources.

    In January, Indonesia implemented a hotly contested ban on the export of unprocessed minerals that include gold, copper, nickel, manganese, lead, zinc and iron ore. It is expected to approve a hike in coal royalty payments this year. Indonesia is expected to approve an old proposal to raise all coal royalty payments to 13.5%. Major Indonesian coal companies currently pay 13.5% coal royalty, while small and mid-sized producers pay about 3-7%.

    Source: Platts