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INDONESIAN COAL MINING POLICY

KEYNOTE SPEECH
Clean Coal Day in Japan 2015 International Symposium
BAMBANG GATOT ARIYONO
DIRECTOR GENERAL OF MINERAL AND COAL

DIRECTORATE GENERAL OF MINERAL AND COAL


MINISTRY OF ENERGY AND MINERAL RESOURCES

OUTLINE
I.

BACKGROUND

II.

COAL RESOURCES, RESERVE AND QUALITY 2010 2014

III. PRODUCTION, DMO, EXPORT AND WORLD COAL PRICE 2010-2015


IV. THE MAIN POLICY OF INDONESIAN ENERGY
V.

COAL PRODUCTION CONTROL

VI. MINERAL AND COAL INVESTMENT


VII. LABOR AND COMDEV
VIII. COAL PRICES REFERENCE/(HBA) VS 4 INDEX
IX. THE STATE REVENUE OF SUB SECTOR MINERBA
X.

LETTER OF CREDIT

XI. COAL MAIN PORT FOR COAL EXPORT


XII. CLOSING REMARKS

1. BACKGROUND
1. Refering to the Constitution, coal right is held by the state and the coal
is utilised for the most of the peoples prosperity. It also implies that the
state must increase the value of the coal in order more benefit is gained
by the people.
2. The new Mining Law No. 4/2009 mandates the Government should
manage the resources through conserving, prioritization of domestic coal
demand and increasing value added of mineral and coal for the purpose
of creating sustainable economic development.
3. There are some issues regarding coal mining for this forum such as:
production controll, DMO, port for coal export, L/C and state revenue.

2. INDONESIAN COAL RESOURCES, RESERVE AND QUALITY 2010 - 2014

The growth of yearly national coal resources are approx. 5% and reserves are
approx. 12%. This growth mainly influenced by the increase in world coal prices
Only 23% of resource can be modified to reserve, it is mainly influenced by land
acquisition problem, lack of infrastructure and scarcity of LRC utilization in mine
mouth.
There is an information of thick deep seated coal (> 25 m thickness).
Indonesian coal greatest potential is mid rank ( 4800-5800 cal/ g GAR) and
followed by low-rank ( <4800 cal/ g GAR).

3. INDONESIAN PRODUCTION, DMO, EXPORT AND WORLD COAL PRICE 2010-2015


500

474

450
395

389

400

458
425

421

412

401

402
382

Million Tonnes

353
350
300

316

312

323

330

321

323

287

280
250

231

250
200

210
185

187

150
102
100

77

65 65

79
66

80

67

82

72

76
46

50
0
2010

production (plan)

2011

Production (realization)

2012

Export (plan)

2013

Export (realization)

2014

DMO (plan)

2015*

DMO (realization)

Coal production growht about 14% per annum (2010 - 2014). World coal price (demand) affecting Indonesian
coal production and export. Coal production remained up when coal price fell because coal company maintain
revenue and many IUP has begun the production phase.
Production until April 2015 about 130 million ton or decrease 21% compared to April 2014 (164 million ton). This
is mainly due to rainfall and impact of coal export sales policy.
Domestic coal demand growth very slow when compared to export (4% per annum). Quality for domestic market
: 4.000 6.500 Kcal/Kg GAR
Coal export about 75-80% of total coal production, coal export for 2014 growth 3,5% of 2013.
*: up to July 2015

4. THE MAIN POLICY OF INDONESIAN ENERGY


Energy Law No. 30 of 2007 which further regulated in Government Regulation
No. 79 2014 About the National Energy Policy (KEN):
Energy resources for national economic development, creation of domestic
value added and employment.
To reduce fossil energy exports gradually, especially coal, and set a deadline
to start halt coal exports.

To realize economic balance of energy, national energy development priorities


based on use of coal as a mainstay of the national energy supply.
Utilization of coal for electricity, industry and utilization of new energy sources
in form of liquid coal and hydrogen for transport.
Primary energy mix of coal by 2025 at least 30% and by 2050 at least 25%.

5. COAL PRODUCTION CONTROL (2015 2019)

Based on the National Mid-Term Development Plan of 2015-2019 (Presidential Decree No. 2 of
2015:
Production Plan in 2015 amounted to 425 million tons and decreased to 400 million tons in
2019.
Domestic percentage of the National Coal Production in 2015 amounted to 24% and
increased to 60% in 2019

5.1 DOMESTIC COAL PLAN UTILIZATION


No

End User
1 a. Existing Powerplant
b. Powerplant Program 35 GW
2 Metalurgi
a. PT krakatau Steel & Group :
1. PT Krakatau Steel
2. PT Krakatau Posco
3. Meratus Jaya Iron & Steel
b. PT. Antam
c. PT. Vale
3 Fertilizer
a. PT Pupuk Sriwijaya
b. PT Pupuk Iskandar Muda
c. PT Pupuk Kujang Cikampek
d. PT Petrokimia Gresik
e. PT Pupuk Kalimantan Timur
4 Cement
a. PT. Semen Holcim
b. PT. Semen Indonesia
c. Semen Lainnya
5 Textile
6 Pulp/paper
7 Briquette
Strategic Plan
Long Term Plan

Gap (Longterm plan-Strategic plan)

3.582.000

2016
76.200.000
16.600.000
4.648.000

Year
2017
76.200.000
18.300.000
4.648.000

2018
76.200.000
32.500.000
4.648.000

2019
76.200.000
89.900.000
4.648.000

222.000
2.195.000
400.000
565.000
200.000
1.305.700
30.500
0
0
475.200
800.000
10.542.300
1.700.000
5.999.295
2.843.006
2.200.000
650.000
30.000
92.310.000
102.000.000

968.000
2.195.000
400.000
885.000
200.000
1.980.200
705.000
0
0
475.200
800.000
12.039.831
1.850.000
6.189.831
4.000.000
2.390.000
700.000
30.000
114.588.031
111.000.000

968.000
2.195.000
400.000
885.000
200.000
1.995.200
720.000
0
0
475.200
800.000
13.990.161
1.850.000
7.140.161
5.000.000
2.590.000
760.000
30.000
118.513.361
121.000.000

968.000
2.195.000
400.000
885.000
200.000
6.875.200
3.710.000
450.000
450.000
475.200
1.790.000
15.604.904
1.850.000
7.754.904
6.000.000
2.790.000
820.000
30.000
139.468.104
131.000.000

968.000
2.195.000
400.000
885.000
200.000
11.075.200
4.900.000
560.000
560.000
475.200
4.580.000
16.372.105
1.850.000
8.522.105
6.000.000
3.020.000
880.000
30.000
202.125.305
240.000.000

2015
74.000.000

9.690.001

(3.588.031)

2.486.639

(8.468.104)

37.874.695

Quality (Kkal/Kg)
3800 - 6150

4200 -7400

4200 - 4910

4900 - 6499
4200 - 5600
4500 - 5500
>3800

6. MINERAL AND COAL INVESTMENT

Investment in MINERBA annually increased by an average 27%, which in Ccow


by 6% and mining services grew by 59%, it is influenced by the increase in
demand and price of coal. Most Ccow use services of mining contractor.

7. LABOR AND COMDEV

Expatriate only 0.3% of Ccow and Main Contractor Labor.


Ccow and Main Contractor Labor only 9.6% of Mining Sector Labor (data from Statistic Of Indonesia).

Realization largest Comdev costs in


2012 and decreased in 2013.
We suspect Comdev costs are affected
by the company's financial condition as
a result of the price of coal.

8. COAL PRICES REFERENCE (HBA) VS 4 INDEX


200.00

HBA AUGUST
2015 =
US$ 59,14

180.00

160.00

HBA

Harga (US$/ton)

140.00

120.00

ICI-1

100.00

80.00

NEX

60.00

GC
40.00

20.00

PLATTS-1
0.00

HBA = 25% ICI 6500 + 25% Platts 5900 + 25% NEX 6322 + 25% GC 6322;
Since 2011 coal prices continued to decline this was due to the oversupply in the Asia
Pacific market is mainly due to exports of Indonesia and Australia, while coal
consumer uptake slowed mainly to Tiongkok.

8.1. HBA will be revised formula related to use of coal price condition on basis
quality of Indonesian coal.
Revision includes:
1. Calorie basis for low calorie steam coal (GAR): 4200 (3 sources index)
2. Revised index for coking coal: 2 sources index
Proposed revision:
1. Changing composition of coal Index for HBA 2
2. Changing sulfur content correction factor and ash :
using percentage of coal price, or
using correction tables for each level.

9. THE STATE REVENUE OF SUB SECTOR MINERBA


NON TAX REVENUE BY ACCOUNT

NON TAX REVENUE BY COMODITY

Average increase in total


non-tax revenues by 18%
per year.
Growth of non-tax
revenues 15% coal and
mineral 23% of sales.
Coal contributes an
average of 84% of non-tax
revenues.
Target non-tax of 2015
amount 52 Trillion Rupiah.
State revenues (tax and
non-tax) from the mining
sector in 2013 amounted
to 145.1 Trillion dollars
(9.7% of the budget).

10. LETTER OF CREDIT


Objective: The effective implementation of export policies, optimization and accuracy
of foreign exchange earnings from exports, export certainty, etc.

Basic Legislation:
1. Minister Of Trade Regulation No. 04 / M-DAG / PER / 1/2015 (January 5, 2015)
regarding Terms of Use L/C for the Export of Certain Goods.
Export of mineral and coal must use the method of payment L/C;
Through the national Foreign Exchange Bank;
L/C payment documents examined by surveyors.
2. Minister Of Trade Regulation No. 26 / M-DAG / PER / 3/2015 (March 30, 2015)
regarding Implementation of the Special Conditions of Use L/C for the Export of
Certain Goods.
In the case of exporters have not been able to use the method of payment L/C,
the exporter may apply suspension to the Minister of Trade after getting a
recommendation from technical ministries.

3. Circular of the DG of Mineral and Coal No. 03.E / 30 / DJB / 2015 regarding On
Requirements For Getting Technical Considerations Suspension of Payment
ways L/C.
Requirements Copies of ET-Mining Products of the Ministry of Trade;
Sales contracts that have set the mode of payment other than L/C
The ability of exporters to adjust the payment method using L/C
Status Request Suspension of Payment L/C (May 11, 2015):
1. Recommendations: 24 application;
2. Rejection: 15 application;
3. Evaluation process : 9 application.
Summary: 48 application.
4. Letter of the MEMR to the Minister of Trade Number: 2924/30 / MEM.B / 2015 (20
April 2015) regarding Application Exception To The Terms Of Use L/C for Mineral
and Coal Exports.

11. COAL MAIN PORT FOR COAL EXPORT (PROPOSED LOCATION)


Existing Coal Export Port Kaltim
1. BoCT
2. BCT
3. KPC Port

Aceh
(South Aceh)
Sumatera Barat
(Padang)
Riau
(Riau bay)

Jambi
(around Jambi bay)

Kalimantan Timur, location:


1. Balikpapan bay
2. Adang bay
3. Berau bay
4. Maloy bay

Sumsel
Tanjung Api Api

Bengkulu
(Bengkulu port)
Lampung Tarahan
Existing PTBA

Kalsel/Kalteng, location:
1. Taboneo/Pulau laut,
2. Sungai Danau,
3. Batu Licin

Existing Coal Export Port Kalsel


1. NPLCT
2. IBT

11.1. THE POTENTIAL CAPACITY OF COAL EXPORT PORTS (million tons) YEAR 2014*
Existing Coal Export Port Kaltim
1. BoCT: 12
2. BCT: 3.8
3. KPC Port: 40

Aceh
South Aceh : 0.5
Sumatera Barat
Padang: 2
Riau
Riau bay: 2

Jambi
Around Jambi bay: 3

Kalimantan Timur, wilayah:


1. Balikpapan bay: 57.8 **)
2. Adang bay: 34
3. Berau bay: 34
4. Maloy bay: 6.5

Sumsel
Tanjung Api Api: 6.4

Bengkulu
Bengkulu port: 3

Lampung Tarahan
Existing PTBA: 2

1.
2.
3.

Kalsel/Kalteng, location:
Taboneo/Pulau laut: 55.8 ***)
Sungai Danau: 13.5
Batu Licin: 5.5

*) if there is no transshipment
**) out from Mahakam River
***) out from Barito River

Existing Coal Export Port Kalsel


1. NPLCT: 20
2. IBT: 20

12. CLOSING REMARK


1. Need to do a strategic move to increase its reserves of existing coal
resources;
2. Prioritized coal as an energy source for national power generation and
industry;
3. Efforts to increase utilization of low rank with utilization around the mine
site through increased added value and utilization of coal for Mine Mouth
Power Plant;
4. The subsector mineral and coal has play important role as national
economic backbone (investment and state revenue);
5. Decline of coal prices affect slowing exploration spend, slowing reserve
growth, decline in the state revenues and decline of Community
Development expenditures.

www.minerba.esdm.go.id

ATTACHMENT

2008-2013 HIGHLIGHT INDONESIAN COAL EXPORTS


Sources: Statistic Of Indonesia

TOP TEN DESTINATION (% ton)


TOP TEN FOB VALUE (Billion US$)

Main destination of coal export are to Asia Pacific where largest to Tiongkok, India, Japan, South
Korea, etc.
Largest value FOB Vessel of coal export are to Tiongkok, India, Japan, South Korea, Taiwan, etc.
The sales price of coal is the largest average sales to Japan, Italy, Taiwan, Philippines, Malaysia, etc.