Delegates at the 18th annual Coaltrans Asia conference have been urged to participate in the development of renewable energy production in Indonesia. The forum was held in Nusa Dua, Bali, from June 4-6. Indonesian Energy and Mineral Resources minister Jero Wacik officially opened the conference and asked coal entrepreneurs to investigate alternate power sources to invest in.
“Indonesia’s economic growth has reached 6.5%, causing the increase of domestic needs. So we will control the export (of coal) to make the composition of export and domestic secure well,” Jero Wacik said. This does not mean coal mining is prohibited. “Export is still allowed, but we control it to prioritize domestic needs to be fulfilled first. Indonesia is open to foreign investors, not only for coal but also for renewable energy.”
There are claims Indonesia’s export tax will cost the country up to US$11 billion as companies look to other major supply regions to bypass the new fee.
The annual Coaltrans conference is a crucial backdrop for global coal producers and traders to learn about what advances in technology have been made.
Senior coal research analyst at Wood Mackenzie Rohan Kendall told delegates Indonesia is likely to remain the largest seaborne thermal coal exporter for the next eight years. ”Indonesian cash costs have doubled since 2006. This was not an issue while coal prices were rising but now that prices have softened it is important to constrain costs to keep projects viable. Even without the imposition of an export tax, Indonesian coal producers may find it difficult to prevent a continuation of cost increase imposition but additional taxes will further exacerbate cost hikes.”
Almost 20% of revenue from coal production in Indonesia already goes to the government in royalties. The proposed export tax could see a 36% hike in cash costs to the coal industry, and could impact on how competitive Indonesian mines will be.
“An Indonesian export tax would have a larger effect than the combined impact of Australia’s minerals resource rent tax (MRRT) and carbon tax, which we estimate will decrease the value of the Australian coal industry by US$9 billion,” said Rohan Kendall.
Delegates discussed the additional increasing costs for future coal production in Indonesia, due to the greenfield areas targeted in South Sumatra and East Kalimantan, which are not located close to the coast, thus inflating transport costs.