Indonesia Investments has updated the company profile of Tambang Batubara Bukit Asam. This state controlled company is one of the largest coal mining companies in Indonesia and has vast coal mines in South Sumatra, West Sumatra and East Kalimantan. The company feels the impact of global economic turmoil as can be seen from the 44.2 percent fall in net income over the first six months of 2013 compared to the same period in 2012. A weakening coal price in combination with higher costs of sales were the underlying reasons. 

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PT Indo Tambangraya Megah Tbk (ITMG) is one of the leading coal producing companies in Indonesia. The company's main businesses include integrated coal mining, coal processing and operational logistics. The mining locations of Indo Tambangraya Megah are spread across six concession areas, all of which are currently operational and productive. Four concession areas are located in East Kalimantan, one in South Kalimantan, and the other one in both East and Central Kalimantan.

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In order to increase government revenues, the Indonesian government announced that, starting from 2014, coal miners that have a Mining Business License (Izin Usaha Pertambangan/IUP) will have to pay a higher royalty fee to the central government. The decision was made during a meeting between the government and Commission XI of the House of Representatives (DPR) this week. The new royalty policy, which was originally planned to be introduced this year, is expected to result in an increase of IDR 4 trillion (USD $408.2 million) in state revenues.

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Indonesia's coal production is projected to increase 4.4 percent to 400 million tons this year, up from the government's initial forecast of 390 million tons. According to Bob Kamandanu, chairman of the Indonesian Coal Mining Association (Asosiasi Pertambangan Batubara Indonesia, APBI), this growth will be spurred by increased demand from Japan, South Korea, Thailand and Taiwan in June. The coal price is expected to increase accordingly in the middle of the year.

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Declining profit in Indonesia's coal industry was also confirmed by Adaro Energy's (ADRO) net profit of 2012. The coal mining company reported net profit of US $385.34 million, a 30 percent fall compared to 2011 when it amounted US $550.35 million. Earnings per share also declined from US $0,01721 in 2011 to US $0,01205 in 2012. Lower sales volume and lower global coal prices were cited as the major factors behind the decline.

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The chairman of the Indonesia Coal Mining Association said that Indonesia's coal exports are expected to increase from 310 million tons in 2012 to 330 million tons in 2013, a 6.5 percent increase. Coal producers have been facing a tough period since July 2008 when global coal demand weakened and triggered volatile - but mostly declining - coal prices ever since. Coal demand from China and India, however, is expected to increase this year.

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