April 20, 2012 / 9:11 AM / 6 years ago

Indonesia still mulling coal export tax-govt

* Indonesia wants to ensure enough coal to meet domestic demand

* Coal export tax still part of ongoing government talks

* Rules part of mining policy to encourage processing onshore

By Yayat Supriatna and Michael Taylor

JAKARTA, April 20 (Reuters) - Indonesia is still discussing an export tax on thermal coal for this year, as it seeks to boost revenues and investment in the country’s mining industry, a trade ministry official said on Friday.

An official with the ministry of energy and minerals for world’s top exporter of thermal coal had reportedly ruled out a tax on coal earlier this week, but a trade ministry official said it was an idea still on the table.

“We have not yet decided whether coal will be dropped or not from the plan because we are still in discussions,” said Deddy Saleh, the director general of foreign trade at the trade ministry, said on Friday.

“For sure, the government will impose an export tax on minerals although we have not decided on the tariff,” said Saleh. “On coal we are still in discussions about whether we are going to impose the tax or not.”

GROWING DEMAND FOR COAL

Demand for Indonesia’s coal comes mainly from China and India, which are expected to lift coal imports significantly over the next five years. Output will hit 390 million tonnes for 2012, industry groups say.

The world’s top exporter of refined tin and home to the second biggest copper mine, i s keen on developing its mining industry, create jobs and turn into a producer of higher-value finished goods from an exporter of raw materials.

Indonesia had failed previously to impose a coal export tax to secure domestic coal supplies, with the plan dropped after court action by industry.

“Although several years ago government dropped the coal export tax because of a Supreme Court decision, the situation is different now,” Saleh added. “We are preparing arguments on coal export tax.”

CONFUSED INVESTORS

The export tax proposal, which could be 25 percent this year and 50 percent in 2013, is part of a flurry of recent plans supporting a 2009 mining law aimed at increasing state revenue from a sector that contributes about 12 percent of GDP in Southeast Asia’s top economy.

But many of the plans announced have left investors scratching their heads as different government departments offer conflicting information.

“It looks like there is about fifteen hundred people trying to organise a party for six,” said Lachlan Shaw, senior commodity analyst at Commonwealth Bank of Australia. “It seems that there is a different minister saying something different every day.”

The country is also due to ban exports of some unprocessed metals from 2014 despite industry pleas to delay the plans because of a lack of smelter and processing capacity.

The regulation is particularly vexing for miners holding permits called IUPs, w hich may now need to detail how they will process metals domestically, or be forced to stop all exports as early as Ma y of this year.

There are currently more than 10,000 IUP holders, and most are small-scale miners producing nickel and bauxite for buyers in China and India.

This week, a government official suggested that small-scale miners should team up with larger miners, many of whom already have smelters, to help them with the 2014 domestic processing requirement.

In addition to the export tax policy, Saleh said the trade ministry is also planning to issue a decree that will only allow registered exporters of minerals and metals to export.

“All the mineral and coal exports will have to be verified by appointed surveyors,” he said, adding that only registered exporters with detailed plans for downstream processing and smelting would be awarded export permits by the government.

Many major miners in Indonesia have claimed that they won’t be impacted by changes to the country’s mining laws, as they hold different contracts that are decades-long and contain clauses that are difficult to change. (Reporting by Yayat Supriatna and Michael Taylor; Editing by Ed Lane)

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