The government of Indonesia introduced the new licensing system in a bid to enhance monitoring of coal shipments (illegal coal exports form a structural problem in Southeast Asia’s largest economy, implying that the government misses out on royalties). Last month, a government official said that between 30 and 40 million tons of coal are exported illegally each year from coal-rich regions in Kalimantan and Sumatra.

To obtain the new ET status, local coal miners are required to seek a recommendation from Indonesia’s Ministry of Energy and Mineral Resources first as stipulated by Regulation of the Director General of Mineral and Coal No 714 K/30/DJB/2014 (Peraturan Dirjen Minerba No 714 K/30/DJB/2014). To obtain this recommendation, the miner needs to show documents that prove it has met tax and royalty payment obligations. It is also mandatory to have the clean & clear certificate (CnC). This CnC certificate shows that the miner has no outstanding royalty and other tax debts, fulfilled exploration and environmental commitments, has no property delineation issues and obtained the necessary forestry permits. Bambang Tjahjono Setiabudi, Director of Coal Exploitation Development for the Ministry of Energy and Mineral Resources, said that his office has now provided recommendations for export registration for 220 local coal companies. Setiabudi added that, contrary to exports, domestic coal production has declined 15.9 percent to 29.7 million tons in October 2014 from the same month last year as local coal miners have been selling off coal reserves.

In the first ten months of 2014, Indonesia produced 342.3 million tons of coal, down 7.5 percent from the same period last year, possibly due to reduced output as a result of low coal prices. Moreover, the Indonesian government tries to limit coal production growth in an attempt to safeguard future supplies for local power plants. In 2014, the government capped domestic coal output at 420 million tons and exports at 310 million tons.

Indonesian Coal Statistics:

     2006    2007    2008    2009    2010    2011    2012    2013
Production     194     217     240     256     275     353     383     444
Export     144     163     191     198     208     272     304     356

in million tons
Source: Ministry of Energy and Mineral Resources