Indonesian miners cleared to trade excess coal quotas

Wednesday, 16 Nov 2011

Indonesia will allow coal miners to trade supply quotas to help them meet domestic sales requirements.

Mr Thamrin Sihite director general of minerals and coal at the Ministry of Energy and Mineral Resources said, coal miners must set aside 25% of production next year exclusively for domestic sales, as part of a 2009 mining law.

Mr Sihite said that some companies won’t be able to meet the requirement because they don’t produce the type of coal needed locally. He said that “Miners will be allowed to transfer domestic sales quotas from others via auction.”

Mr Sihite said that the Jakarta Futures Exchange may be appointed to carry out the auction.

In August, the energy ministry raised producers’ domestic market obligations for next year to 82.07 million tonnes from 78.97 million tonnes in 2011. That’s about 25% of the country’s estimated output next year of 332 million tonnes.

Mr Andam Dewi head of research and business development at the Jakarta Futures Exchange said that “Miners who have exceeded their domestic sales quota may offer their excess coal to miners who still fall short of their allocation by auction.” He added that “Hopefully, it can start next year.”

The government can halve miners’ coal production if they fail to meet their annual domestic sales quota, according to an energy ministry decree on domestic coal market obligations. It is yet to enforce the sanction on any mining companies.

(sourced from Bloomberg)