Indonesia denies plans to tax coal exports

Indonesia Energy and Mineral Resources Minister Jero Wacik has denied any plans to tax thermal coal exports after hinting at the move last May.

According to The Jakarta Post, Wacik said that, instead of the controversial export tax for coal, he would prefer to impose a new market control mechanism to secure domestic supply.

As Indonesia tries to get more revenues from its vast wealth of minerals, mining companies are becoming increasingly frustrated by the country’s mining policy.

Earlier this year, South-East Asia's top economy surprised the global mining community with a new rule, Government Regulation No. 24 of 2012, which compels all foreign mining companies to sell majority stakes in their mining operations to locals by the tenth year of production.

A few weeks later, Indonesian officials suggested a possible 20% tax on mining exports, which would include coal, was in process.

Also in May, British company Churchill Mining Plc (LON:CHL), filed for international arbitration in its dispute against the State over rights to the $1.8 billion East Kutai coal project (EKCP) in the Indonesian portion of Borneo.

The two-year fight has attracted the attention of other mining companies and highlighted the uncertainties of investing in Indonesia, says The New York Times:

When David F. Quinlivan visits Indonesia, he carries stacks of documents and a well-worn map of a mining concession in East Kalimantan province marked with a dizzying array of timelines and arrows. They are his weapons in a two-year battle with Indonesia’s judicial system.

With a population of 240 million, Indonesia is the world’s premier thermal coal exporter and also a tin powerhouse.

The country's coal demand is expected to grow 10% next year to 63.2 million tonnes and then to about 68 million tonnes by 2014, according to data published on Monday by state utility PT Perusahaan Listrik Negara (PLN). It forecasts consumption will surge to 125.7 million tonnes by 2022.