JAKARTA, Sept 9 Indonesia's coal output could fall by as much as 40 percent next year if the government follows through on its plan to increase royalties paid by mining permit holders, a trade group said on Monday.
Indonesia, the world's top exporter of thermal coal, plans to increase from next year royalties paid by mining permit holders (IUP) to between 10 and 13 percent from 3.5 to 7 percent now.
"I would say 30-40 percent (cut). Most of Indonesia's coal (production) is IUP-related," Pandu Sjahrir, commercial committee chairman of the Indonesian Coal Mining Association, told reporters.
If the royalties are unchanged, Indonesian coal output in 2014 is likely to be near the same level as this year's more than 400 million tonnes, he said.
The IUP licenses are normally held by smaller or newer miners so the move will not affect major miners with long-standing Coal Contract of Work licenses, such as top producer PT Bumi Resources, which already pay 13.5 percent.
The coal mining group expected benchmark Newcastle thermal coal prices to trade between $77-80 a tonne over the next year, slightly higher than Friday's closing price of $76.70. (Reporting by Fergus Jensen; Writing by Randy Fabi)