NUSA DUA (Indonesia): Indonesia plans to control coal exports and is considering a tax on shipments from the world's top thermal coal exporter, the mining minister said, comments that pushed shares in the country's top coal miners down by more than 10%.
Indonesia has introduced a series of regulations aimed at squeezing more state revenues from the mining industry, including on ownership and export taxes, but had steered clear of coal.
An export curb from the world's top exporter of thermal coal is not likely to boost prices in the short-term for a well-supplied market, but could push up global costs in the long run as it would force Indonesia's top coal buyers India and China to seek alternatives.
“Indonesia is the biggest supplier of sea-borne thermal coal, and if everyone has to pay 20% more to get Indonesian tonnes, it will have a real impact for sure,” said Lachlan Shaw, commodities analyst at Commonwealth Bank of Australia in Melbourne.
Energy and Minerals Minister Jero Wacik said the country needed to conserve coal for domestic use, in a G-20 economy seeing strong growth and surging demand for power generation.
The comments, which follow a series of new rules, drove down shares in the country's leading coal miners Bumi Resources and Adaro Energy by over 10% .
Indonesian officials have previously talked about a possible tax on coal but have so far exempted it from a flurry of mining regulations this year that have included a 20% tax on the export of unprocessed metals. Indonesia's coal exports were worth US$27bil last year, or 13% of the total.
Indonesia's coal demand is seen growing 10% next year to 63.2 million tonnes and then to about 68 million tonnes by 2014, state utility PLN said yesterday. It forecasts consumption will surge to 125.7 million tonnes by 2022.
“Indonesia's need for coal will increase strongly, so exports will need to be controlled,” mining minister Wacik told the Coaltrans conference in Bali, without giving any details on the possible scope of export curbs or a timeframe.
Thamrin Sihite, a director-general in the energy and minerals ministry, said the country was still considering a tax on exports, while another official at the ministry said it could impose a quota on production and higher royalties.
Indonesia already has a domestic supply obligation for coal, but miners have so far been easily able to meet this and ship growing volumes each year to meet regional demand, particularly to India.
“The key question is, if the government requires coal producers to set aside a larger amount of tonnes for domestic consumption, can the coal producers expand production faster than those domestic obligations? If they can, exports will grow as well,” said Shaw.
Officials say new mining policies are aimed at helping the country conserve its resources and increase state revenue, though they have been criticised for creating uncertainty in the sector and hurting investor sentiment.
South-East Asia's top economy imposed a rule earlier this year requiring foreign companies to sell down stakes in mines and increase domestic ownership to at least 51% by the 10th year of a mine's production.
Indonesia's move towards limiting mineral exports is adding to worries by global investors already looking for safety in the dollar. The country's rupiah currency, emerging Asia's worst performer so far this year, fell 1% yesterday. Reuters