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Indonesia coal miners protest coal upgrading rule

World Coal,

Coal miners in Indonesia are urging the Government to delay its plans to introduce a rule limiting coal exports by quality. Under the rule, which is due to be phased in by 2014, coal producers will have to upgrade low-quality coal to minimum 5600 kCal/hg calorific value before it can be exported. Producers fear that the rule will dampen interest in investments in Indonesia.

Supriatna Suhala, executive director of the Indonesian Coal Mining Association, said: “People have started investing in mining low quality coal. It will cause them financial losses if the Government decides to ban it.”

The country is seeking to increase its revenue from exports from the mining sector by exporting products of higher value. But limited mineable reserves of high quality coal have forced miners to pursue low quality coal to feed increasing demand. Around 16 companies produce low quality coal of about 4000 kCal/kg, which typically retails at around US$ 30/t. Medium quality bituminous coal sells for about US$ 120/t.

There are development schemes in place for the technology to upgrade coal, but so far nothing has bee successfully piloted to enable large-scale upgrades.

Suhala hopes that if the rule does eventually come into effect, the Government will provide incentives to help smaller outfits: “We think the Government should delay imposing the regulation until there is a proven upgrading technology […] It would be good, for example, if the Government cut royalties for miners who set up an upgrading facility.”

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