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Coal royalty increase is postponed in Indonesia

Published by
World Coal,

Following the slump in global coal prices, the Indonesian government will postpone its plan to raise royalties for the country’s coal mines.

Declines in global coal prices have also led to Indonesian coal miners reducing production volumes. Following this, certain companies encountered free cash flow turned negative and the coal production revenue cannot cover operational costs and it is suspected that the potential increase of coal royalties will add to the difficulties companies are facing.

The government initially announced the plan to raise coal royalties at the end of 2014 because it intends to generate more non-tax revenue from the coal industry in order to finance its economic and social development programmes. Since this introduction in 2014, this plan has been met with delays due to concerns that it may lead to shutting down more coal mining companies, the loss of jobs and increase illegal mining.

Edited from source: Indonesia Investment by Harleigh Hobbs

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