CoalASia Edition 116

MORE PRODUCTION
CUT NEEDED

IMRMEAMBRAAKLIEANTNS CE

Pandu P Sjahrir, Chairman of Indonesia Coal Mining Association (ICMA)



1COAL ASIA JULY 25 - AUGUST 25, 2020

contents

14 OPINION | Bill Sullivan 10

Renewable energy – Some progress OPINION |
but key requirement still missing Singgih Widagdo

22 COMPANIES Boosting the coal
added-Value,
PT-FI delivers higher copper sales, where to go?
lower gold sales
Indonesia has experienced a
24 Continuity of Freeport’s mining long journey as a nation. The
75th birthday of the Republic of
amid Covid-19 pandemic Indonesia is a great moment to
assess the journey to develop
28 COAL NEWS the nation, including its mining

industry. The theme of the
nation’s celebration for its
75th year of independence is
just right, “Indonesia Maju”
(Progressive Indonesia). Progress
is symbolized by the equality and
growth of the economy for the

Indonesian people.

2 COAL ASIA JULY 25 - AUGUST 25, 2020

3COAL ASIA JULY 25 - AUGUST 25, 2020

contents 82

FOCUS

More production cut needed

The combination of coal oversupply and weak demand
during COVID-19 pandemic period has significantly
brought down the coal prices in the global market.
Given such condition, mining companies in Indonesia
expect to cut production volume to at least manage
supply-demand balance.

58 MINERAL NEWS
78 ELECTRICITY NEWS

4 COAL ASIA JULY 25 - AUGUST 25, 2020

5COAL ASIA JULY 25 - AUGUST 25, 2020

86 MAIN STORY
Market imbalance remains

Global coal market imbalance is expected to stay during this year
because the supply side remains strong while demand side shows
negative growth. Oversupply condition has been occurring since
2019 and getting worse due to the impact of COVID-19 pandemic.

90 ANALYSIS | Ian Wollff
Decree 110 K & new mining law 3/2020 – The big clean out?

96 Shares performance

contents

We welcome opinions articles from experts, executives on coal industry. The article, either in Indonesian
or English, should be sent to [email protected] and has between 1,000 and 1,500 words.

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6 COAL ASIA JULY 25 - AUGUST 25, 2020

7COAL ASIA JULY 25 - AUGUST 25, 2020

PATRONS [PUBLISHER’S LETTER]
Singgih Widagdo
Coal production cut
PUBLISHER
Alexander Ginting The Indonesia Coal Mining Association (ICMA) estimates the country’s coal
production volume to reach around 480-500 million tons this year, or about 50
([email protected]) million tons production cut of the government’s target of 550 million tons, in order
to reach supply and demand balance in the global seaborne coal market and help
EDITORIAL DIRECTORS stabilize coal price.
Reiner Simanjuntak
Based on ICMA’s study, seaborne coal demand has dropped by 85 million tons
([email protected]) from 980 million tons in January to 895 million tons in June 2020.

Johannes Simbolon ICMA chairman, Pandu Sjahrir warned that the figure may drop deeper toward
the end of the year if the COVID-19 pandemic lingers on.
([email protected])
Coal price has been under pressure since January of this year due to oversupply
EDITOR IN CHIEF situation with diminishing demand in both domestic and export markets, including
Adianto P. Simamora China and India – both of which are Indonesia’s top coal export markets.

([email protected]) In terms of domestic consumption, the government has revised downward the
domestic demand estimate for this year from initial target of 155 million tons to 145.6
SENIOR EDITOR million tons due to the COVID-19 pandemic, which has caused lower electricity
Tri Subhki Rakhmatullah consumption.

([email protected]) The government coal reference price (HBA) in June and July hovered at the level
of US$50 per ton, close to the price level in 2016. 
EDITOR
Thomas Robiana Sembiring The government has set the country’s coal production target this year at 550
million tons, lower than realized production in 2019 at 616.16 million tons. The
([email protected]) official data of Ministry of Energy and Mineral Resources (MEMR) stated that the
realized production as of June 24 was 257.38 million tons, or 46.80 percent of total
ART DIRECTOR target.
Ipunk AF.
The government said that there are 30 coal mining companies which have
PHOTOGRAPHERS proposed for upward revision in their coal output target as stated in the 2020 Budget
Khalsa Alkalis Leatemia and Work Plan (RKAB), while some major coal miners planning to maintain their
initial coal output target this year.
Abdul Rahim
Mudasir IDX-listed energy company PT Adaro Energy Tbk is one of the major coal
producers that anticipated a decline in production of around 10 percent compared
Lucky Ebenhaezer (Research) to last year’s achievement, or at the lower end of the company’s 54-58 million tons
GRAPHIC DESIGNER production guidance. Adaro said that it would focus on maintaining healthy margins
M. Yunus and continuity of supply to customers.

ADVERTISING MANAGER CoalAsia runs the coal supply and demand trend in the aftermath of COVID-19
Nizma Sari Nurulita as the main story.

([email protected]) CoalAsia Magazine and Petromindo.com also would jointly organize a series of
ADVERTISING SUPPORT webinars on mining-related issues, namely Indonesian nickel outlook on August 5
and ASEAN coal market outlook on August 13.
Santi Marpaung
Irmawati Happy reading

EDITORIAL SECRETARY Adianto P. Simamora
Romeldo Sembiring Editor in Chief

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8 COAL ASIA JULY 25 - AUGUST 25, 2020

9COAL ASIA JULY 25 - AUGUST 25, 2020

OPINION

By Singgih Widagdo - Indonesian Coal Observer

Boosting the coal added
-Value, where to go?
I ndonesia has experienced a
long journey as a nation. The push towards the coal’s added-value Mining Business License) in Production
75th birthday of the Republic enhancement (PNT) as the only way Operation stage can work with other
of Indonesia is a great moment to control and correct the course of the holders of IUP or IUPK in the same
to assess the journey to develop the industry, as the government is entrapped stage to develop or utilize their coal
nation, including its mining industry. in the uncontrollable growth of hundreds products, or they can work with other
The theme of the nation’s celebration of coal mining business actors of various parties in the same coal utilization
for its 75th year of independence is just levels nationwide, from holders of business. The up-grade of PKP2B
right, “Indonesia Maju” (Progressive the small-scale concessions under the (Coal Contract of Works) into IUPK
Indonesia). Progress is symbolized Mining Business License (IUP), up to special licenses is stipulated under
by the equality and growth of the those owning Coal Contracts of Work Article 169 Paragraph 4 of the law. As
economy for the Indonesian people. (PKP2B). the continuation of PKP2B contracts,
The real progress of presenting the best holders of IUPK are required to conduct
results of the coal mining industry to However, setting the standard for the activities for domestic coal utilization.
all people of Indonesia is measured type of PNT coal to be the government’s
on how the country can accelerate the prime selection is not easy. In deciding The government clearly has an
realization of PNT (the added-value the policies on PNT and in selecting open mind and appreciates the business
enhancement). But so far, PNT is just a the right PNT coal for their production, actors developing PNT projects. Article
source of discourses and debates without the government and the companies, 47 (g) stipulates that coal mining
meaningful results for the coal industry respectively, have to go through with integrated activities for domestic
community. various considerations on technicalities, coal development and utilization will
calculations on investment and taxes, be given a 10-year extension after
Up to now, coal exports are still also the PNT out-market. every fulfillment of the requirements
dominating the course of the industry, according to the laws and regulations.
and they have taken some 75 percent So, how can we establish adequate Various coal developments under
of the total national production. It is PNT policies in Indonesia as the the law include coal upgrading, coal
even expected to continue like so for the government has a limited time to include briquetting, coking coal production, coal
next 10 years. This condition should be PNT details in a Government Regulation liquefaction, coal gasification (including
the source of evaluation in interpreting (PP), as a subsidiary of Law No. 3 of 2020 the underground coal gasification), and
the theme of “Progressive Indonesia” that should be issued within the year? coal slurry or coal water-mixture.
in the coal mining sector. Enhancing
the growth of domestic use, especially Pushing PNT Establishment With various selection of PNT
in terms of optimizing the role of The legal base of PNT establishment, coals, it would be easier for the coal
coal as the country’s energy, should mining industry to choose the right
be the prime goal of coal utilization. based on Law No.3 of 2020 on Minerals PNT coal to suit their companies. The
The commitment to continue the and Coal (MINERBA), is very clear. government, which has given their
Article 104 Paragraph 2 of the law attention more to the industry in the
affirms that holders of IUP (Mining upstream sector, would have to shift
Business License) and IUPK (Special

10 COAL ASIA JULY 25 - AUGUST 25, 2020

their focus a bit to the downstream The authority in charge of has experienced that they finally had
industry by strengthening the sector. Energy and Mineral Resources to decide to limit the national coal
This would be beneficial to improve (ESDM), in coordination with the production to 550 million tons in 2020,
the state revenue, and at the same local governments, should prepare based on RKAB (the Work and Budget
time, optimize coal utilizations for the for a detailed mapping on companies Plan) that could totally reach 700 million
highest welfare of the people. under IUP license in the Production tons. That should be the lesson learned on
Operation (IUP-OP), on the available how the management of the total national
However, it is not easy to push infrastructure, on the .financial coal production should be integrated with
completion of PNT projects in the midst condition of companies owning the PNT (the added-value enhancement)
of the coal mining industry already the IUP-OP license to be able to planning, to be projected by the
developed to the current state right now, attract investment in PNT projects. government for future goals.
as we must take into account hundreds Enforcing PNT development without
of small-scale IUP (Mining Business consideration of the individual With the current condition of the
License) business. The continuation condition of coal mining companies coal mining industry, the government
of PKP2B projects require long-term would certainly lead into failure. still has to do a lot of work related
decisions, let alone the ones involving The government will not be able to to mapping the business in terms of
the small-scale IUP concessions. PNT accelerate the implementation of PNT their mining scales, production, coal
projects are reasonably left behind, programs in the coal mining industry. qualities, infrastructure, and absorbency
except those involving briquette- of the PNT products. Besides that,
type PNT as they use a much simpler Coal exports are expected to the ESDM authority has to provide
technology compared to others within decline instead of growing stronger various incentive policies to expedite
the PNT project selection. over the years. The ESDM authority the implementation of PNT programs,

11COAL ASIA JULY 25 - AUGUST 25, 2020

OPINION

which should be first discussed between apart from the briquette projects already produce coal with qualities suitable for
the ESDM and the Finance Ministries. established by other mining companies. direct use of domestic coal-fueled power
The derivative products of coal tar plants, and for various export markets
We have to admit that the and coal gas of MEK projects can be abroad. Observing the synfuel projects in
government (ESDM) still has to maximized into semi-coke products. South Africa, we know that pioneering
complete a lot of work to accelerate MEK’s US$ 81 million investment industries should not be placed on the
the implementation of PNT programs. and the 1 million tons of coal input can hands of people on the corporate level.
They are not merely the domain of the produce approximately 600,000 tons of The government should be in charge
ESDM Ministry. They involve cross semi-cokes, 30 MW electricity power from the start to clear the way and build
ministries, especially the Ministry of capacity, and 50,000 tons of tar/MFO the initial PNT coal projects.
Finance and the Ministry of Industries. per year. MEK’s accomplishment in
Various regulations related to the building the PNT projects since 2017, Out of seven PKP2B companies,
coal price, coal royalties for various in fact, was initially an “enforced” PT Arutmin and PT Kaltim Prima Coal
PNT projects, fiscal incentives (tax project that they had to do, because they (KPC) are confirmed to submit initial
holiday and tax allowance), market produce very low-quality coal, which proposals to upgrade their contracts
security on PNT absorbency should be cannot be mined and then directly sold into IUPK (Special Mining Business
clarified, confirmed, and regulated by to the end users. But this condition has License). Bumi Resources Group,
the government before they can be used become the challenge for the corporation their holding company, has decided
as the bases of business calculations to take positive steps and continue to to do PNT gasification to produce
of the mining business actors. Without work together on PNT projects with methanol, and work with ITHACA
considering all PNT-related parameters, the contractors, namely, Metallurgical and Air Product for the project. This
the implementation would be a failure in Corporation of China Ltd. (MCC), and is their choice of PNT project to pass
the national-scale. PT. Sinocost Construction Indonesia. the requirements to be able to continue
their coal mining business in the future.
Evaluation of PKP2B Contracts Such “forced condition” has With the total investment reaching US$
In line with Law No.3 of 2020, the happened, not only on the corporate 2 billion, the gasification project is
level, but also on the state level. Due expected to use 5 to 6.5 million tons of
up-grade of PKP2B (Coal Contract to the embargo, the South African coal per year. Considering the licenses
of Work) into IUPK (Special Mining government was forced to continue their of two subsidiary companies of Bumi
Business License) is not automatically projects on synfuels (synthetic fuels). Resources expiring later this year and in
done. Contract holders have to pass Since the 1920s, South African scientists 2021, proposals on their PNT projects
strict requirements. The track record have seriously studied utilization of coal should be already submitted to the
on company performance in the as synthetic liquid fuel. They even did government to be immediately assessed
course of their operation, potential coal commissioning (Sasol 1 project) and evaluated, so they can obtain their
state revenue, as well as proposal of to produce synfuel back in 1954. They IUPK special licenses.
the company holding PKP2B contract have continued to move forward with
on suitable PNT projects for them Sasol 2 Project in 1980, and Sasol 3 The remaining five companies
would be evaluated to be recorded Project in 1982. under PKP2B contracts have their
and then approved by the government. own reasons on when they are going
Meanwhile, the government should On the other hand, out of seven to submit their licensing paperwork,
confirm that they would be committed PKP2B contracts expiring later this including their choices of PNT projects,
to ensure the evaluation’s transparency, year up to the next six years, no new to the government. For PT Arutmin, it
accountability, as well as independency. PNT projects are built. We have to would be too late to submit any proposal
acknowledge the fact that this is not if they wait for the issuance of the
So far, not many PKP2B the contract owners’ fault. So far, government regulation (PP). But for the
companies have PNT projects in the government has their priority on other companies, it would be worthwhile
commercial operation. PT Megah increasing the state revenue through to wait for the effective issuance of
Energi Khatulistiwa (MEK) could be coal exports. Besides that, all seven the subsidiary regulation, including a
the pioneer in coal mining industry in companies with PKP2B contracts specific PP on detailed elaboration on
Indonesia, for having a PNT program,

12 COAL ASIA JULY 25 - AUGUST 25, 2020

production set forth in RUEN (the
General Planning on National Energy)
should be the prime calculations of the
PKP2B companies before they extend
their license to IUPK. PNT can become
separate projects, except if the mining
companies are merely interested in the
coal supply to PNT projects.

CA | Boim Closing
On the whole, the worst problem
PNT projects, before they submit their for the issuance of their IUPK licenses.
proposals on IUPK license extensions. For PKP2B companies producing the government has to deal with
related to coal mining industry and
Based on various assessments for the qualified coal that can be directly their management and control over
upgrade of PKP2B contracts into IUPK absorbed into the export markets, the national production is that the law
licenses, deciding on PNT programs establishing PNT programs is certainly guarantees that holders of IUP (Mining
would not be easy for the companies not in their list of short-term and Business License) for Exploration
under PKP2B contracts. The amount immediate priorities. From the start, Operation will automatically obtain their
of investment, choice of partners, and PNT programs are meant to create IUP for Production Operation (IUP-
other technicality problems become commercial values for low-quality coal, OP). Endorsing PNT projects to shift
the parameters carefully weighed. optimize utilization of coal reserves the export volume to fill in the domestic
PNT programs become new projects not saleable in the domestic and export demand will not solve the problem as it
to be entirely or partly owned by the markets, and eventually boost the would not be comparable to the growth
companies under the IUPK licenses, growth of other industries that have of national production.
while PNT projects are not entirely capabilities to generate more state
related to the science and coal mining revenues and employment. We have the assumption that
industry. So far, the proposed PNT DME and Methanol projects of PT
projects lean more on the chemical Similarly, the amount of production Bukit Asam only consume some
industry. And these facts should be to be approved by the government 13.5 million tons of coal per year.
carefully considered and accurately during the term of the IUPK license That amount would be far below the
calculated by the companies under is also considered in deciding the production cut down required by the
PKP2B contracts, before they decide on PNT project. Projection on declining government managing the total national
certain PNT models as the pre-requisite growth of the export markets, policy coal production. However, we have
on limitation of the total national coal to appreciate the government for their
continued efforts to work on successful
PNT programs. The government’s team
on PNT Road Map with a number of
task-forces on various fields should
be supported by all parties, including
business actors of the mining industry.

Finally, selected PNT projects
should be worth fighting for, and the
companies selecting them should be
given the chance to make it work as
they have gone through complicated
calculations on coal production, amount
of investment, technicalities, labor, and
PNT coal markets.

13COAL ASIA JULY 25 - AUGUST 25, 2020

OPINION

By Bill Sullivan
Christian Teo & Partners (in asscociation with Stephenson Harwood LLP)

Renewable energy – Some progress
but key requirement still missing1234

Introduction power, geothermal power and tidal environmentally sound practices;
Indonesia has made some recent power (together, “Renewable Energy iv. for the maximum benefit of
Resources”). the people;
progress in promoting the development v. not later than 2050; and
of renewable energy as a viable The Ministry of Energy & Mineral vi. in a manner that favors domestic
alternative to coal. Resources (“ESDM”) has estimated companies;
that Indonesia has Renewable Energy
The key requirement for large Resources equivalent to (i) 28.5 GW b. Presidential Regulation No. 22 of
scale renewable energy development from geothermal, (ii) 75 GW from 2017 re National Energy General
in Indonesia, however, is still missing. hydro, (iii) 32 GW from biofuel and (iv) Plan (“NEGP”) (“PR 22/2017”)
Unless and until there is a commercial 207 GW from solar and (v) 60 GW from which:
tariff for the State Electricity Company’s wind. Yet, Indonesia has only managed
purchase of electricity generated from to utilize a tiny fraction of its Renewable i. has been issued as an
renewable energy, Indonesia can Energy Resources to date implementing regulation of
never realistically expect to achieve its GR 79/2014 in order to
potential as a leader in renewable energy Indonesia’s extremely modest achieve NEP objectives;
development. utilization of its Renewable Energy ii. serves as the guideline for
Resources is despite the fact the country Provincial/ Regional
In this article, the writer will review now has a reasonably comprehensive Governments in drafting
the recent progress that has been made policy and regulatory framework their own Regional Energy
in promoting the development of in place for the development of its General Plans;
Indonesia’s renewable energy resources Renewable Energy Resources. This iii. provides for the renewable
before turning to the importance of and policy and regulatory framework energy utilization targets of:
the prospects for a commercial tariff to includes: - >23% by 2025; and
move that development to the next level. a. Government Regulation 79 of 2014 - >31% by 2050;
iv. is effective until 2050; and
Background re National Energy Policy (“NEP”) v. may be amended every 5 years; 
1. Renewable Energy Potential (“GR 79/2014”) which sets out
Indonesia’s NEP being: c. Minister of Energy & Mineral
Much has been said and written i. energy independence; Resources (“MoEMR”) Decision
about Indonesia’s potentially vast ii. energy security; No. 143K/20/MEM/2019 re NEGP
renewable energy resources including iii. achieved through the application
solar power, wind power, hydro power, of equitable, sustainable and
biomass power, biogas power, city waste

1. Bill Sullivan, Senior Foreign Counsel with Christian Teo & Partners and Senior Adviser to Stephenson Harwood LLP.
2. Bill Sullivan is the author of “Mining Law & Regulatory Practice in Indonesia – A Primary Reference Source” (Wiley, New York & Singapore 2013), the first internationally

published, comprehensive book on Indonesia’s 2009 Mining Law and its implementing regulations.
3. Copyright in this article belongs to Bill Sullivan and Petromindo.
4. This article may not be reproduced for commercial purposes without the prior written consent of both Bill Sullivan and Petromindo.

14 COAL ASIA JULY 25 - AUGUST 25, 2020

CA | Boim

for Years 2019 to 2038 which e. Presidential Regulation No. 66 of 2. Constraints on Renewable Energy
details: 2018 re Second Amendment of Resource Development
i. national electricity policy; Presidential Regulation No. 61 Numerous reasons can be advanced
ii. development plan for electricity Year 2015 re the Collection and
supply; Utilization of Oil Palm Plantation for why Indonesia has made only very
iii. current and projected electricity Funds, which mandates the use of modest progress, to date, in developing
demand/supply; and biodiesel; and utilizing its Renewable Energy
iv. required capital investment in Resources. Some of these reasons
electricity supply to meet current f. MoEMR Regulation No. 49 of include:
and projected demand; 2017 re Main Provisions of Power a. the existing pricing structure or
Purchase Agreements (“PPAs”);
d. Presidential Regulation No. 4 of tariff for electricity generated from
2016 re Electricity Infrastructure g. MoEMR Regulation No. 50 of Renewable Energy Resources is not
Acceleration, which stipulates 2017 re Replacement of MoEMR commercial;
that (i) electricity infrastructure Regulation No. 12 of 2017 re b. the previous requirement to transfer,
must prioritize the utilization of Utilization of Renewable Energy with no compensation payable,
Renewable Energy Resources and Resources for Procurement of ownership of plants generating
(ii) regional governments may Electricity (“MoEMRR 50/2017”); electricity from Renewable Energy
provide incentives and required Resources (“RE Power Plants”)
permits as well as determine the h. MoEMRR Regulation No. 53 to the State Electricity Company
purchase price of the electricity to be of 2018 re First Amendment to (“PLN”) at the end of the term of the
used in their administrative areas; MoEMRR 50/2017; and relevant power purchase agreement
(otherwise known as “build own,
i. MoEMRR No. 4 of 2020 re Second operate and transfer” or “BOOT”)
Amendment to MoEMRR 50/2017
(“MoEMRR 4/2020”).

15COAL ASIA JULY 25 - AUGUST 25, 2020

OPINION

(“BOOT Requirement”). production in a particular region of or buy electricity from RE Power
Indonesia only (otherwise commonly Plants;
c. the licensing system for RE Power known as the “local grid price”) b. draft guidelines on subsidization of
Plants is overly complicated; (“Regional BPP”) is higher than energy including Renewable Energy
the average base cost of electricity Resources;
d. there are unresolved spatial planning production across all regions of c. appoint a financial institution to be
issues in building RE Power Plants; Indonesia (“National BPP”), the responsible for financing projects
maximum electricity purchase price to develop and utilize Renewable
e. there are few incentives for the payable by PLN will be 85% or Energy Resources;
development and utilization of 100% of Regional BPP depending d. adopt/implement a so-called “feed in
Renewable Energy Resources upon the particular Renewable tariff” for electricity generated from
by independent power producers Energy Resource; and Renewable Energy Resources;
(“IPPs”); b. where Regional BPP is not more e. allocate a budget for the construction
than National BPP, the electricity of infrastructure required for the
f. the Government still provides purchase price payable by PLN shall development; and utilization of
subsidies for electricity generated be directly negotiated and agreed Renewable Energy Resources; and
from coal in the form of the between PLN and the relevant IPP f. develop a small-scale electric power
domestic market coal supply (together, “BPP Pricing Strategy”). system based on the use of electricity
obligation and a maximum selling generated from Renewable Energy
price for coal supplied to PLN for Readers interested in knowing more Resources in order to ensure power
electricity generating purposes; about the BPP Pricing Strategy, its supply in remote areas.
history and why it is such an obstacle
g. depending upon the particular to the development of Indonesia’s Indonesia also has a newly appointed
Renewable Energy Resource, the Renewable Energy Resources are acting Director General of Minerals
development and utilization of referred to the writer’s previous articles & Coal, Mr. Rida Mulyana, who has a
the same can require expensive on this subject being (i) “Encouraging reputation for both being capable and
technology; and the Use of Coal Alternatives – New BPP very much in favour of the expedited
Pricing Strategy “, CoalAsia Magazine development and utilization of the
h. there is insufficient March - April 2017, Petromindo and (ii) country’s Renewable Energy Resources
financing available for RE Power “Rethinking the Use of Coal Alternatives as evidenced by his performance in his
Plants due to the often poor – Changes to Renewable Energy previous position as Director General of
economics of RE Power Plants. Regulation”, CoalAsia Magazine October Electricity.
– November 2017, Petromindo.
Although each of the above While the long promised feed-in
identified reasons has contributed to the Analysis and discussion tariff and most of the other proposals
relative lack of progress in developing 1. Signs of Progress outlined above have yet to become
and utilizing Indonesia’s Renewable a reality, the issuance of MoEMRR
Energy Resources, it is unquestionably The Government has recently shown 4/2020 has been an important and
the absence of a commercial pricing a willingness to be more proactive recent step forward in encouraging
structure or tariff for electricity in encouraging the development and the development and utilization
generated from Renewable Energy utilization of Indonesia’s Renewable of Indonesia’s Renewable Energy
Resources that is the most significant Energy Resources. This has led to serious Resources.
problem (“NC Tariff Problem”). consideration by ESDM of a variety of
initiatives/proposals including to: MoEMRR 4/2020 came into force
The history of the NC Tariff a. establish an independent business on 26 February 2020.
Problem is long and complicated. The
NC Tariff Problem, however, has its entity to develop and utilize 2. Major Changes Introduced by
origins in the following two principles Renewable Energy Resources and/ MoEMRR 4/2020
which presently determine the price
PLN pays for electricity generated from
Renewable Energy Resources:
a. where the base cost of electricity

16 COAL ASIA JULY 25 - AUGUST 25, 2020

CA | Boim

2.1 Greater Use of IPP Direct Direct appointments must be and applied literally, PLN is now
Appointment: PLN is now allowed completed within 90 days compared to under an obligation to ensure the
to purchase electricity, generated 180 days for direct selection (Article continuous operation of all RE
from Renewable Energy Resources, 4(1)(c) of MoEMRR 4/2020). Power Plants.
on the basis of direct appointment
rather than direct selection (i.e., Direct appointment is generally Considerable caution is probably
tender) in the following situations: more cost and time efficient, from warranted, however, in trying to
the perspective of IPPs, than is direct understand the true scope of PLN’s
a. the local electricity system is in a selection. As such, the greater use of newly extended “must run” obligation.
critical or emergency condition; direct appointment, in the case of the First, there is no detail provided as
purchase of electricity generated from to just what PLN must do in order to
b. there is excess electricity available Renewable Energy Resources, makes it ensure the continuous operation of all
in a particular business area, which more attractive for IPPs to invest in RE RE Power Plants. Second, no penalties
excess electricity may be purchased Power Plants. or sanctions are imposed on PLN if,
by various means including through for whatever reason, it is not willing or
cooperation with the business area 2.2 Extension of PLN Must Run able to ensure the continuous operation
IPP; Obligation: The previous 10MW of some RE Power Plants. As such,
cap on RE Power Plants that PLN the extended “must run” obligation
c. it is desirable/necessary to increase is obliged to ensure the continuous should perhaps be seen as more of a
the capacity of an existing RE operation of on a “must run” basis statement of principle and as evidence
Power Plant operating in a particular has been dropped (Article 4(3) of of commitment, in theory, to support
business area; and/or MoEMRR 4/2020. As a consequence existing RE Power Plants rather than
and assuming the “must run” as an obligation imposed on PLN
d. there is only one IPP operating a RE obligation is to be interpreted
Power Plant in a particular business
area (Article 4(1)(a) of MoEMRR
4/2020).

17COAL ASIA JULY 25 - AUGUST 25, 2020

OPINION

to take particular actions such as It is notable, however, that no the first time and separate from the
purchasing all the electricity produced penalties or sanctions are imposed on long recognized Renewable Energy
by RE Power Plants regardless of cost PLN if it does not, for whatever reason, Resource of hydro power generated
and need. purchase electricity generated by RE by rivers, streams and waterfalls
Power Plants utilizing solar or wind (Article 7(2) of MoEMRR 4/2020).
2.3 Expansion of PLN Purchase and even though the local grid system
Obligation: PLN’s obligation to is able to connect to RE Power Plants The belated recognition of hydro
purchase electricity generated by generating electricity from solar or wind power, generated by water in dams or
those RE Power Plants utilizing energy sources. Accordingly, it must be reservoirs, as an independent Renewable
solar or wind was previously subject questioned how effective, in practice, Energy Resource makes it possible to
to 3 conditions being (i) the local this change will be in promoting the use “tailor” the regulatory environment in a
grid system is able to connect of solar and wind. way that recognizes and addresses the
to RE Power Plants generating particular issues faced by IPPs wanting
electricity from solar or wind 2.4 Scrapping of BOOT Requirement: to develop and utilize this form of
energy sources, (ii) the purchase of IPPs are no longer required to hydro power but not necessarily by IPPs
electricity originating from solar or transfer, without compensation, wanting to develop and utilize hydro
wind energy sources is intended to ownership of their RE Power Plants power generated by rivers, streams and
reduce Regional BPP and/or (iii) the to PLN at the end of the term of the waterfalls. If handled correctly, the
purchase of electricity originating relevant PPA (Article 5(6), 6(6), possibility of a more “tailored” regulatory
from solar or wind energy sources 7(8), 8(6), 9(6), 11(6), 12(5), 12(a) environment should encourage greater
helps meet electricity demand in (4) of MoEMRR 4/2020). This investment in RE Power Plants relying
locations where there are no other applies to all IPPs regardless of what upon hydro power in either form.
primary energy sources. Conditions Renewable Energy Resource is used
(ii) and (iii) have now been removed by a particular RE Power Plant. 2.6 Clarification of Electricity Purchase
such that the only remaining pre- Requirement for City Waste Energy:
condition to PLN’s obligation to The scrapping of the BOOT The circumstances in which and
purchase electricity generated by Requirement improves the potential the conditions under which PLN
RE Power Plants utilizing solar or return on investment for RE Power is obliged to purchase electricity
wind is that the local grid system is Plants by creating the prospect of generated by RE Power Plants
able to connect to RE Power Plants longer commercial operating periods. utilizing city waste energy have
generating electricity from solar This makes it more attractive for IPPs been clarified. Previously, PLN
or wind energy sources as the case to invest in RE Power Plants. The was simply obliged to purchase
may be (Article 5(1) of MoEMRR scrapping of the BOOT Requirement electricity generated by RE Power
4/2020). should also make it easier to obtain third Plants utilizing city waste energy “in
party financing for RE Power Plants as accordance with the prevailing laws
Reducing the number of pre- prospective lenders can look forward to and regulations”. MoEMRR 4/2020
conditions to PLN’s obligation to longer revenue streams being available now, however, provides that PLN’s
purchase electricity generated by to IPPs for the purpose of servicing and purchase of electricity generated
RE Power Plants utilizing solar or repaying their loans. by RE Power Plants utilizing city
wind clearly has the potential to assist waste energy shall be the subject
in promoting the use of electricity 2.5 Recognition of New Renewable of an assignment from MoEMR to
generated by RE Power Plants utilizing Energy Resource: Hydro power PLN to purchase power from IPPs
solar or wind by making it more generated by water in dams or which been approved/appointed as
difficult for PLN to take the position reservoirs, constructed for multiple city waste energy developers by
that it is not obliged to purchase such purposes, has been recognized as a local governments in accordance
electricity. new Renewable Energy Resource for with relevant laws and regulations

18 COAL ASIA JULY 25 - AUGUST 25, 2020

CA | Boim

(Article 10(3) of MoEMRR 4/2020). The inclusion of a timetable for IPPs must now report (i) to
MoEMR approval is of some benefit MoEMR, (ii) the implementation
MoEMR’s assignment to PLN in reducing the previous risk of an progress of the construction of RE
amounts to (i) a direct appointment of indefinite delay between (i) a PPA Power Plants, (iii) every 3 months
the relevant city waste energy developer/ being concluded between an IPP from the date of signing of the relevant
IPP and (ii) approval of the electricity and PLN and (ii) MoEMR giving PPA until the date of commencement
purchase price payable by PLN to the its approving/refusing approval of commercial operation, (iv) with
relevant city waste energy developer/IPP of the agreed price. This previous a copy of each report being sent to
(Article 10(3)(a) of MoEMRR 4/2020). uncertainty may have discouraged the Director-General of New and
prospective IPPs from investing in Renewable Energy and Energy
Given the amount of waste generated RE Power Plants on the basis that Conservation, the Director-General of
by Indonesia’s cities and the consequent the development and utilization of Electricity and the Board of Directors
importance of making the best possible Renewable Energy Resources was of PLN and (v) through an online
use of the energy potential represented simply “too hard” and, therefore, system or, if the online system is not
by this waste, clarifying the rules related should be avoided in favor of more available, manually in writing (Article
to the purchase of electricity generated certain investment opportunities. 18(a)(3) of MoEMRR 4/2020).
by RE Power Plants utilizing city waste
energy is a positive development. It is important to note, however, Increased supervision by MoEMR
Without this clarification, IPPs would be that there is no consequence of or of PLN’s dealings with IPPs and the
unlikely to take seriously the potential penalty if MoEMR, in fact, does not construction progress of RE Power
business opportunity represented by city approve/withhold his approval of Plants is to be welcomed given PLN’s
waste energy. the agreed electricity price within 5 historical reluctance to prioritize
days. More particularly, MoEMRR the development and utilization
2.7 Introduction of Timeline for MoEMR 4/2020 does not provide that the of Renewable Energy Resources.
Electricity Purchase Price Approval: agreed electricity purchase price is The effectiveness of this increased
Where (i) Regional BPP is less than automatically approved if there is no supervision will, of course, depend very
or equal to National BPP and (ii) the decision forthcoming from MoEMR much upon how seriously this increased
purchase price for electricity generated within 5 days. As such, the practical supervisory role is taken by MoEMR.
by RE Power Plants has to be agreed effectiveness of the newly introduced
between the relevant IPP and PLN timeline must be questioned. 2.9 Updating BPP Pricing Strategy:
before being submitted to MoEMR The BPP Pricing Strategy has been
for approval. MoEMR is now obliged 2.8 Improved Supervision: PLN must updated to reflect the other changes
to approve/not approve the agreed forward to MoEMR (i) a copy of introduced by MoEMRR 4/2020.
electricity purchase price within a each PPA signed by it with an IPP
maximum of 5 days of the agreed and (ii) within 5 days of the signing The current BPP Pricing Strategy,
price being submitted to MoEMR taking place (Article 18(a)(2) of post the issuance of MoEMRR 4/2020,
(Article 14(2) of MoEMRR 4/2020). MoEMRR 4/2020). may be summarized as follows:

19COAL ASIA JULY 25 - AUGUST 25, 2020

OPINION

Renewable Energy PLN Electricity Purchase Price
Resource
Regional BPP > National BPP Regional BPP ≤  National BPP
Solar (PLTS
Photovoltaic) Maximum 85% x Regional BPP Determined based on agreement between IPP and PLN as
Wind (PLTB) subsequently approved by MoEMR.
Maximum 85% x Regional BPP
Hydro (PLTA) Determined based on agreement between IPP and PLN as
Maximum 100% x Regional BPP (i.e., equal to subsequently approved by MoEMR
Hydropower from Regional BPP)
dams/reservoirs Sumatra, Java, Bali and any other area where Regional BPP is not
Biomass (PLTBm) Determined based on agreement between IPP more than National BPP - determined based on agreement between
and PLN as subsequently approved by MoEMR IPP and PLN as subsequently approved by MoEMR
Biogas (PLTBg)
Maximum 85% x Regional BPP Determined based on agreement between IPP and PLN as
City Waste (PLTSa) subsequently approved by MoEMR
Maximum 85% x Regional BPP
Geothermal (PLTP) Determined based on agreement between IPP and PLN as
Maximum 100% x Regional BPP (i.e., equal to subsequently approved by MoEMR
Tidal (Ocean PLTA) Regional BPP)
Liquid Biofuel Determined based on agreement between IPP and PLN as
(PLT BBN) Maximum 100% x Regional BPP (i.e., equal to subsequently approved by MoEMR
Regional BPP)
Sumatra, Java, Bali and any other area where Regional BPP is not
Maximum 85% x Regional BPP more than National BPP - Determined based on agreement between
IPP and PLN as subsequently approved by MoEMR
Determined based on agreement between IPP
and PLN as subsequently approved by MoEMR Sumatra, Java, Bali and any other area where Regional BPP is not
more than National BPP - Determined based on agreement between
IPP and PLN as subsequently approved by MoEMR

Determined based on agreement between IPP and PLN as
subsequently approved by MoEMR

Determined based on agreement between IPP and PLN as
subsequently approved by MoEMR

IPPs, contemplating the possibility price with PLN is a “two-edged sword” IPPs, contemplating the possibility
of investing in RE Power Plants at best. While the absence of any of investing in RE Power Plants utilizing
utilizing solar, wind, biomass, biogas specified maximum purchase price hydro (PLTA), city waste eenrgy or
or tidal power and where Regional might imply a high degree of discretion geothermal and where Regional BPP is
BPP is greater than National BPP, are and flexibility on the part of PLN as greater than National BPP, are certainly
still subject to a maximum electricity to what electricity price it can agree better treated, in terms of electricity
purchase price of 85% of Regional to, it also creates great uncertainty pricing, than IPPs contemplating the
BPP. This has not changed since 2017 for IPPs, looking at the possibility of possibility of investing in RE Power
when MoEMRR 50/2017 was issued. investing in RE Power Plants utilizing Plants utilizing other Renewable
It must be assumed that IPPs, looking these types of Renewable Energy Energy Resources. However, there is
at the possibility of investing in RE Resources, as to what electricity price still no assurance that an electricity
Power Plants utilizing these types of PLN may ultimately be willing to price equal to a maximum of 100% X
Renewable Energy Resources, will lack accept. It also seems reasonable to Regional BPP will necessarily provide
adequate incentives to do so in any assume that PLN will never agree to adequate incentives to develop RE
region where Regional BPP is greater an electricity price, in the case of these Power Plants utilizing hydro (PLTA),
than National BPP. types of Renewable Energy Resources, city waste energy or geothermal. This
that is higher than Regional BPP. is because the relevant Regional BPP
In the case of IPPs, contemplating Accordingly, the negotiation risk faced will have been determined on the basis
the possibility of investing in RE Power by IPPs, contemplating the possibility of of a local grid price that, to a very large
Plants utilizing hydro power from dams/ investing in RE Power Plants utilizing degree, reflects the cost of electricity
reservoirs or liquid biofuel and where these types of Renewable Energy generated by coal fired power plants
Regional BPP is greater than National Resources, is very arguably “all on the as the dominant energy source in most
BPP, the prospect of an open-ended downside”. regions of Indonesia. The relationship
negotiation of the electricity purchase

20 COAL ASIA JULY 25 - AUGUST 25, 2020

between the cost of electricity generated (ii) is less able to provide heavily RE Power Plants and otherwise develop
by coal fired power plants and the cost subsidized electricity to vulnerable and utilize Indonesia’s Renewable
of electricity generated by power plants households and businesses. Energy Resources.
utilizing Renewable Energy Resources
is tenuous at best. At a time when the Government is The long promised regulation,
focused on getting financial assistance introducing a commercial feed-in tariff
Having regard to the foregoing, to the newly unemployed and for electricity generated by RE Power
MoEMRR 4/2020 has done very little disadvantaged as a result of Covid-19, Plants, is needed more than ever if
to overcome the long standing problem it would be understandable (albeit Indonesia is to realize its full potential in
created by the BPP Pricing Strategy in shortsighted) if the Government was to terms of the development and utilization
terms of not providing an electricity see promoting the greater development of its Renewable Energy Resources.
pricing structure that properly reflects and utilization of Indonesia’s Renewable
the costs of constructing/operating RE Energy Resources as a lesser priority to The interlinked economic, financial
Power Plants and otherwise generating be revisited once the current economic and fiscal crises rapidly unfolding in
electricity from Renewable Energy and fiscal crises are overcome. Indonesia, however, probably mean
Resources. that a commercial feed-in tariff, for
The risk of social unrest is also never electricity generated by RE Power
3. Prospects for Long Promised Feed- far away in Indonesia. Accordingly, Plants, is something for the future only
in Tariff while the Government unquestionably and is not likely to “see the light of
A new regulation, setting out a much recognizes the importance of promoting day” in 2020 and, possibly, not even
the development and utilization in 2021.
improved and more commercial tariff of Indonesia’s Renewable Energy
for electricity generated from Renewable Resources, it can scarcely be doubted This article has been contributed
Energy Resources has been promised that avoiding social unrest is a much by Bill Sullivan, Senior Foreign
since 2019 and various drafts of the bigger priority for the Government at
same have been circulated. It seems, this time. Providing generous financial Counsel with Christian Teo &
however, that the fate of the promised assistance and continued, heavily Partners and Senior Adviser
new regulation is inexorably tied to the subsidized electricity to vulnerable to Stephenson Harwood LLP.
state of the Indonesian economy, the households and businesses is a well
state of the Government’s fiscal position established approach, in Indonesia, to Christian Teo & Partners is a
and the state of PLN’s finances, all of “keeping the lid on” social unrest. Jakarta based, Indonesian law
which have only gone from bad to worse firm and a leader in Indonesian
in 2020. Summary and conclusions energy, infrastructure and mining
MoEMRR 4/2020 has introduced
The Covid 19 induced economic law and regulatory practice.
crisis now facing Indonesia, together important changes to the regulatory Christian Teo & Partners
with the associated fiscal crisis now environment for electricity gerated by
facing the Government, may well RE Power Plants. These changes go operates in association with
mean that the long promised regulation some way to making it more attractive international law firm Stephenson
providing for a commercial feed-in for IPPs to invest in RE Power
tariff, for electricity generated by RE Plants and otherwise encourage the Harwood LLP which has ten
Power Plants, does not become reality greater development and utilization offices across Asia, Europe
any time soon. of Indonesia’s Renewable Energy
Resources. and the Middle East: Beijing,
Requiring PLN to pay commercial Dubai, Hong Kong, London,
tariffs for electricity generated by RE MoEMRR 4/2020, however, has done Paris, Piraeus, Seoul, Shanghai,
Power Plants would inevitably mean little if anything to overcome the long Singapore and Yangon. Readers
that PLN (i) needs more financial standing weaknesses of the BPP Pricing
support, rather than less financial Strategy in terms of the inadequate may contact the writer at
support, from the Government and financial incentives it provides to build email: [email protected]

office: 62 21 50202789
mobile: 62 815 85060978

21COAL ASIA JULY 25 - AUGUST 25, 2020

COMPANIES

PT-FI delivers higher copper sales, lower gold sales

By Romel S. Gurky 2020, lower than 185 thousand ounces in and gold volumes. PT-FI’s unit net cash
the same quarter of last year, primarily costs (net of gold and silver credits) of
G old and copper giant PT reflecting timing of shipments. $0.56 per pound of copper in second-
Freeport Indonesia (PT-FI) quarter 2020, were significantly below
saw consolidated copper Freeport said consolidated sales unit net cash costs of $2.15 per pound
sales of 172 million pounds volumes from PT-FI are expected to in second-quarter 2019, primarily
in the second quarter of this year, approximate 770 million pounds of reflecting reduced site production costs,
higher than 151 million pounds in the copper and 0.8 million ounces of gold in higher gold prices and higher copper
corresponding period of last year. 2020.  “As PT-FI continues to ramp-up sales volumes. Site production and
production from its underground ore delivery costs in second-quarter 2019
US-based Freeport McMoRan Inc bodies, metal production is expected included costs associated with mining
said in a statement that the sales increase to improve significantly by 2021,” the the final phase of the Grasberg open pit.
primarily reflected higher ore grades, company said.
partly offset by anticipated lower mill rates Assuming an average gold price of
as PT-FI continues to ramp-up production Because of the fixed nature of a $1,800 per ounce for the second half of
from its underground ore bodies. large portion of PT-FI’s costs, unit net 2020 and achievement of current sales
cash costs can vary significantly from volume and cost estimates, unit net cash
The statement said that PT-FI quarter to quarter depending on copper
booked consolidated gold sales of 180
thousand ounces in second quarter of

22 COAL ASIA JULY 25 - AUGUST 25, 2020

Following is summary consolidated operating data for Indonesia mining:

  Three months ended June 30 six months ended June 30

  2020 2019 2020 2019
Copper (millions of recoverable pounds)        
Production
Sales 181 125 321 270
Average realized price per pound 172 151 299 325
Gold (thousands of recoverable ounces) $ 2.67 $ 2.71 $ 2.54 $ 2.77
Production
Sales        
Average realized price per pound 189 154 3.41 316
Unit net cash costs per pound of coppera 180 185 3.19 420
Site production and delivery, excluding adjustments $ 1,748 $ 1,350 $ 1,709 $ 1,314
Gold and silver credits
Treatment charges        
Export duties 2.00b 3.40 2.29 b 3.24
Royalty on metals (1.95) (1.69) (1.91) (1.75)
Unit net cash costs 0.27 0.26 0.28 0.28
0.09 0.07 0.07 0.08
0.15 0.11 0.15 0.14
$ 0.56 $ 2.15 $ 0.88 $ 1.99

costs (including gold and silver credits) above the first-quarter 2020 average contributions from PT Indonesia
for PT-FI are expected to approximate (and increased to a combined daily Asahan Aluminium (Persero) (PT
$0.54 per pound of copper for the year production average of approximately Inalum). In accordance with applicable
2020 (including $0.34 per pound of 70,000 metric tons of ore per day at accounting guidance, aggregate costs
copper for the second half of 2020). the end of June 2020). PT-FI expects (before scheduled contributions from
The impact of price changes during the its 2021 copper and gold production PT Inalum), which are expected to
second half of 2020 on PT-FI’s average to approximate 1.4 billion pounds of average $1.0 billion per year for the
unit net cash costs for the year 2020 copper and 1.4 million ounces of gold, three-year period 2020 through 2022,
would approximate $0.03 per pound of nearly double projected 2020 levels. will be reflected as an investing activity
copper for each $50 per ounce change in in FCX’s cash flow statement, and
the average price of gold. The successful completion of this contributions from PT Inalum will be
ramp up is expected to enable PT-FI to reflected as a financing activity.
Freeport said the ramp-up of generate average annual production for
underground production at the Grasberg the next several years of 1.55 billion As a result of disruptions to work
minerals district in Indonesia continues pounds of copper and 1.6 million and travel schedules of international
to advance on schedule. During second- ounces of gold at an average unit net contractors and current restrictions on
quarter 2020, a total of 46 new drawbells cash cost of approximately $0.20 per access to the proposed physical site
were added at the Grasberg Block Cave pound of copper assuming an average in Gresik, Indonesia associated with
and Deep Mill Level Zone (DMLZ) price of $1,400 per ounce of gold and COVID-19 mitigation measures, PT-FI
underground mines, bringing cumulative achievement of projected sales volumes has notified the Indonesian government
open drawbells to 261. and cost estimates. of delays in achieving the completion
timeline of December 2023.  “PT-FI
Combined average daily production PT-FI’s estimated annual capital continues to discuss with the Indonesian
from Grasberg Block Cave and DMLZ spending on underground mine government a deferred schedule for the
mines totaled 54,800 metric tons of ore development projects is expected to project as well as other alternatives in
per day during second-quarter 2020, average approximately $0.9 billion light of COVID-19 and global economic
approximately 9 percent above the per year for the three-year period conditions,” Freeport said.
April 2020 estimate and 46 percent 2020 through 2022, net of scheduled

23COAL ASIA JULY 25 - AUGUST 25, 2020

COMPANIES

Continuity of Freeport’s mining amid
Covid-19 pandemic

PT Freeport Indonesia is hiring and training women as remote equipment operators for
underground mining. Instead of working hundreds of feet underground, remote equipment

operators work in an office building on the surface.

I mpacted by the global outbreak of “That way we can continue production areas of the company, spraying disinfectant
Coronavirus Disease 2019 (Covid-19), safely and sustainably, ensuring the regularly, restricting workers’ travel, and
mining industries are confronted with welfare of all workers and their families, increase the capacity of health services.
two difficult choices: Continue mining continually contribute for the local people
operation with the risk of uncontrolled and the state, and ensure the fulfillment Block Caving
pandemic infection or stop operation to of the downstream industries’ demand for The mining area that is currently being
prevent the spread of the pandemic. But the production of PTFI,” PTFI President
for PT Freeport Indonesia (PTFI), the Director Tony Wenas said recently. operated by PTFI is the international
continuity of operation and the safety class of underground mining which is
of workers are two issues that can be PTFI has adjusted its mining very complex. The underground mining
implemented in tandem. operation to the new normal protocol. It consists of several mineral districts, from
Capitalizing on operational experience has implemented the health protocol to Big Gossan, Deep Ore Zone (DOZ), Deep
and leadership for more than 50 years in minimize the spread of Covid-19 in all Mill Level Zone (DMLZ), up to Grasberg
Indonesia, PTFI is able to continue its of its mining operations, including in its Block Cave (GBC).
underground mining while at the same time underground mining. The protocol includes
ensuring the safety of workers as its priority. checking workers’ temperature in bus Deep inside the earth, its operation
terminal, airport and inside all working requires rigorous planning and study.
After various assessments, PTFI decided

24 COAL ASIA JULY 25 - AUGUST 25, 2020

to use the mining method of block caving, PTFI large-scale underground block caving experience, extending over four decades, is the key
an underground mining method which factor in transitioning the Grasberg minerals district to become the largest block caving operation in
capitalizes on gravitation to make ore
blocks collapse on their own weight. the history of the global mining industry.
Despite of requiring huge investment, the
high-tech method is very friendly to the and the strengthening of its four legs. production tunnel evenly in every available
environment. Until now, PTFI is the only As a result, the stone block structure drawpoint. That way, there will be even
mining company in Indonesia which uses distribution of stone pressures and the
the block caving method. that supports the ore block falls will be tunnel stability can be maintained.
weakened and could cause the collapse
The method is started with the digging of the underground mining. It risks the Block Caving challenges
of an underground tunnel toward the ore lives of workers and loss of investments Being implemented inside the
blocks and makes a hole right under the up to trillion of rupiah. Besides, the fallen
ore block. By harnessing the nature of the material will get compacted and hard to earth, the block caving method poses a
stones inside the ore blocks and the earth be retaken for processing. number of challenges. One of them is the
gravitation, PTFI blasts the under part of challenge of seismic activity in DMLZ
the ore block to allow it falls into the hole Therefore, the stability of underground mining, in which stones experience
and connected to the drawpoint in the mining based on the block caving needs to pressures that make them prone to go off.
production tunnel. Then, it is continued be maintained by continually developing
with the collection of the fallen material. the falls as planned and the collection of To tackle it, hydro fracking needs to
Every time it is taken, it will follow with fallen ores through the drawpoint in the be implemented by creating a crack on
another fallen material until all are taken. the ore block. Such way is also used on
hard enough stones to make them easier
The block caving method demands to collapse. Geo-technics calculations is
continuity of falls and production to indeed necessary to implement production
ensure the balance of weight allocation to ensure the stability of the underground
of the falls and the stability of stone mining. The geo-technics calculation is
block structure inside the earth. If the important to ensure the production and
block caving stopped, the continuing conservation of the mineral reserve.
falls will not be balanced by the weight
allocation of the falls. It can be likened The other challenge is mud, as water
with a table that is continually burdened, that seeps through the stones’ cracks and
without the balance of weight allocation mixes with soft stones will become mud.
Besides, the underground mining is also
prone to the falls of stone from the top
or tunnel walls, fires and toxic gas, and
people interaction and heavy equipment.
Compared to the open pit mining, the risk

25COAL ASIA JULY 25 - AUGUST 25, 2020

of underground mining is bigger due manner. But now, it is implemented by using but also the quality human resources.
to narrow and limited space of activities. more modern technology, and even with All stages of development, from study,
remote system by using robotic system. planning, development, up to preparations
Realizing the big challenges, the safety of all supporting infrastructure were
of workers becomes the main priority of With the automation, DOZ mining can implemented during 15-20 years by
PTFI. One of PTFI’s focuses on the safety be implemented from control room at the involving workers of PTFI, who are
is the application of the Fatality Risk distance of around 6 kilometer from the 99 percent Indonesian youngsters from
Management (FRM) program. Through mining site, where operator controls the various regions across the country.
FRM, PTFI applies an effective control to equipment by using monitoring system that
ensure workers can work with zero fatality. reveals the situation in the location. The The involvement of local workers
equipment is controlled with control lever in preparing and implementing all
One of the solutions applied by PTFI and various buttons like playing games. very strategic activities has proven the
is the use of automation technology. With excellence of Indonesian youngsters who
the technology, the heavy equipment Indonesian youngsters are continually progressing in tandem
control underground is implemented The application of the block caving with the company. The involvement has
from control room. also become the means to improve the
method for underground mining of PTFI quality of human resources in Indonesia,
Previously, the company applied the does not only require huge investments and continually increase competitiveness
block caving by using equipment units of and the most advanced technology,
old system, such as LHD (loader) in manual

26 COAL ASIA JULY 25 - AUGUST 25, 2020

of Indonesia’s mining workers. education, health, economy, social and UI in 2018, PTFI had also contributed 33
The superiority of Indonesian culture. percent of Papua province’s regional GDP
(PDRB) and 79.27 percent of Mimika
youngsters is not only seen in the planning The business operations of PTFI has regency’s PDRB. Other multiplier effects
and operation of PTFI’s underground given direct and indirect economic benefits. include the creation of job opportunities
mining, but also in the management of The direct benefits are given through taxes, for up to 210,000 people, consisting
PTFI. The Indonesian youngsters have royalty, dividends, and other incomes of 64,000 people (30%) in Papua and
assumed the strategic positions in PTFI. worth up to US$0.9 billion in 2019. 146,000 people (70%) outside Papua.

Contribution for Indonesia The indirect benefits are “Considering all of the added values
Since its operation in 1967, PTFI derived through the payments of and benefits given by PTFI to the regional
salaries, domestic purchases, people and national economies, PTFI sees the
has been committed to supporting the empowerment, regional development, importance of maintaining its safe and
Indonesian government in achieving the and domestic investments at total value sustainable mining operations. And surely,
national goal, which is to improve the of US$3.9 billion in 2019. It has been it should be integrated with the efforts
public welfare of Indonesian people. Its decreasing if compared to the previous to protect the safety of all workers from
commitment has been realized through years due to the transition period toward any potential risks, including from the
a number of programs to empower full operation of underground mining. Covid-19 pandemic,” Tony concluded.
the people through developments of
Besides, based on the study of LPEM

Maintenance shop located in Deep Mill Level Zone (DMLZ) mine

27COAL ASIA JULY 25 - AUGUST 25, 2020

COALNEWS

Kideco’s coal output up ITMG allocates most of the US$49.9 company PT Indo Tambangraya Megah
2.42% million capital expenditures in 2020 for Tbk (ITMG) in 2018.
TRUST, which is $18.7 million that is
IDX-listed integrated energy company allocated for equipment and machinery. “The permit (IPPKH) was obtained at
PT Indika Energy Tbk saw higher coal The next large capital expenditure is the beginning of this year and operation
production in the first-half (H1) of this allocated for infrastructure development plan to commence in 2023,” Yulius
year despite declining coal price trend. in Melak Cluster, which are $15.6 million Gozali, Director of Investor Relations of
and $9.5 million for Trubaindo and ITMG, said to petromindo.com.
Indika’s Head of Corporate Bharinto, respectively. PT Indominco
Communications, Ricky Fernando was Mandiri has $4.4 million capital NPR is part of ITMG’s Melak Cluster
quoted by Kontan as saying that H1 coal expenditure allocation for equipment and along with PT Bharinto Ekatama, PT
output at its key subsidiary PT Kideco machinery. Trubaindo Coal Mining and PT Tepian
Jaya Agung increased 2.42 percent to 16.9 Indah Sukses. The company owns 77
million tons from 16.5 million tons in the NPR secures IPPKH, to start million tons of coal reserves and 143
corresponding period of last year. operation in 2023 million tons of coal resources with 5,500
kcal/kg of coal quality.
He said that coal production at another Central Kalimantan-based coal firm
subsidiary, PT Multi Tambangjaya Utama, PT Nusa Persada Resources (NPR) NPR and TIS are not yet in operation
increased 5.96 percent to 746,000 tons from has secured the borrow-to-use forestry while ITMG keeps developing their
704,000 tons in the first half of last year. permit (IPPKH) and is expected to start supporting infrastructure, including
operation production in 2023. NPR was hauling road connecting to other operating
He added that the company aims to acquired by IDX-listed coal mining concessions. NPR is expected to utilize the
optimize production the second half to current operating infrastructure of Melak
meet its original output target this year of Cluster to synergize the operations with
30.95 million tons. other mines.

TRUST sets lower OB CA | Boim
removal volume target

PT Tambang Raya Usaha Tama
(TRUST), a mining contractor and
subsidiary company of IDX-listed coal
mining firm PT Indo Tambangraya Megah
Tbk (ITMG), is expected to remove 35
million bank cubic meters (mbcm) of
overburden (OB) in 2020, a lower target
than 48 mbcm in 2019.

“The OB removal and current
production capacity is at 35 mbcm,” Yulius
Gozali, Director of Investor Relations of
ITMG, said to Petromindo.com.

TRUST currently works at its sister
companies, such as PT Indominco
Mandiri, PT Bharinto Ekatama and PT
Trubaindo Coal Mining, which covers OB
removal and coal hauling activities.

ITMG is expected to expand TRUST
scale and scope of operation in Melak
cluster area (Bharinto and Trubaindo) and
increase coal hauling volume up to 8 million
tons per year. In 2019, TRUST hauled 1.7
million tons of coal at Melak cluster.

28 COAL ASIA JULY 25 - AUGUST 25, 2020

CA | Boim

Air Products says coal-to- gasification, syngas clean-up, utilities and Amid the current coal oversupply
methanol plant run under toll methanol production assets to produce condition, Indonesia Coal Mining
scheme methanol for Bakrie and Ithaca. Association (ICMA) has called for the
country’s coal miners to cut production
US industrial gases firm Air Products “Once again, this demonstrates the target this year in a bid to reach supply-
reveals the US$2-billion coal-to-methanol expansion of our onsite business model, demand balance in the market and help
plant it will build in East Kalimantan enabling us to offer customers that want stabilize the price of the commodity.
will be run on a 20-year on-site tolling to start and complete solution, providing
agreement. the products they need from the feedstocks ITMG has previously stated that
that they have,” CEO, Seifi Ghasemi said.  it remained vigilant and adaptive in
Air Products will receive fixed countering the effect of soft coal price
monthly processing fees in US dollar “The fundamental drivers of this environment. The company had expected
and will responsible for capital and project are the national security and lower output target in the first quarter
operating costs, efficiency and reliability energy independence policies of the 2020 at its largest mining operation, PT
while customers will be responsible for Government of Indonesia and we Indominco Mandiri in East Kalimantan
future potential CO2 costs, according to expect to do more projects like this in Province due to severe weather condition.
the company’s presentation released on Indonesia,” Ghasemi added. Indominco is estimated to produce 8.9
Thursday. million tons of coal in 2020.
ITMG won’t cut coal
Under the deal PT Bakrie Capital output target ITMG also produces coal from its
Indonesia, part of the Bakrie Group, Melak Cluster mining concessions which
and PT Ithaca Resources, part of the IDX-listed integrated coal mining covers PT Trubaindo Coal Mining and PT
PT AP Investment, will supply the coal company PT Indo Tambangraya Megah Bharinto Ekatama. ITMG sets production
feedstock and have committed to offtake Tbk (ITMG) said that the company will volume from Trubaindo and Bharinto of
the methanol production for sale within not cut its initial coal production target 4.3 million tons and 2.6-3.7 million tons,
Indonesia. this year of 19 – 20.1 million tons, which respectively.
is lower than realized output 23.4 million
The plant, which is slated to start tons in 2019. ITMG also produces coal from
production in 2024 will produce 2 million PT Kitadin (Embalut) and PT Jorong
tonnes per year of methanol from 6 million “Currently, we do not have a plan Barutama Greston which are expected to
tonnes of coal per year. to cut our production volume target yet produce coal as much as 1.6 million tons
for this year,” Yulius Gozali, Director and 1.4-1.6 million tons, respectively,
Based on the agreement, Air Products of Investor Relations of ITM, said in 2020.
will invest about US$2 billion to build, to Petromindo.com.
own and operate the air separation,

29COAL ASIA JULY 25 - AUGUST 25, 2020

[COALNEWS]

Mangantar S. Marpaung

Marpaung appointed as tons of high rank coal with GAR of 5.200 coal per year,” he told a webinar organized
President Director of Kendilo – 5.400 kcal/kg with high sulphur and high jointly by CoalAsia Magazine and
ash content. Petromindo.com. He said that producing a
Shareholders of East Kalimantan coal ton of NPI requires about five tons of coal
mining firm PT Kendilo Coal Indonesia The website of the mineral and coal with calorific value of GAR 3800 to 4500
have recently appointed Mangantar S. directorate says that 99.9 percent shares of kcal/kg.
Marpaung as President Director to resume Kendilo is held by US-based Kendilo Coal
the operation of the company. LLC with the remaining held by Nippon The government earlier revised
Coke & Engineering Company Limited. upward the projected coal demand this
“We expect to resume production year from the country’s mineral processing
next year,” Marpaung told Petromindo. Existing smelters consume and smelting industry to 23.9 million tons
com. He did not elaborate the planned 19 million tons coal from the initial target of 16.5 million tons.
coal production target. He said that the
company stopped operation in the last two Chairman of the newly-set up Muhammad Wafid, Director of
years, including among others due to the Indonesian Nickel Smelter Forum (FINI), Mineral and Coal Development Program
uncertain coal price. Alexander Barus said that existing at the Ministry of Energy and Mineral
smelting companies which are members of Resources said recently that the higher
Kendilo mine is the former site of FINI are expected to consume a total of 19 coal demand projection from the smelter
global resource company BHP Kendilo.  million tons of coal per year. sector comes following the recent
Kendilo is holder of PKP2B coal mining commissioning of a nickel smelter at the
license, which is scheduled to expire on “The existing capacity of NPI Indonesian Weda Industrial Park (IWIP) in
Sept, 13 2021. Marpaung said that the site production (nickel pig iron) of 3.79 million Weda, Central Halmahera Regency.
has mineable reserves of about 35 million tons would use about 19 million tons of

30 COAL ASIA JULY 25 - AUGUST 25, 2020

PTBA insists coal gasification project feasible

S tate-controlled coal mining “The project is still going on. We are November 2018 in the US for cooperation
firm PT Bukit Asam Tbk in serious discussions with regulators, in the development of coal gasification
(PTBA) insisted that according investors and Pertamina…the project project in Riau Province (the initial
to feasibility study its planned is still on track and is expected to meet location of the project has later been
coal gasification project is economically the previous target,” he told participants moved to South Sumatra).
feasible, dismissing lingering doubts at a webinar hosted jointly by CoalAsia
among some over the commercially Magazine and Petromindo.com. Air Products holds a coal gasification
unproven coal gasification technology.    technology following acquisition from
There is no clear schedule as to when Shell made earlier this year.
Adib Ubaidillah, Director of PTBA and Air Products and Chemical Inc
Marketing of PTBA said that the will sign the final joint venture agreement The proposed coal gasification
company’s team continues to hold over the coal gasification project, which project will process coal into dimethyl
intensive discussions via online with was initially scheduled for March 2020 but ether (DME) and synthetic natural gas
partners US-based Air Products and has been delayed due to the Coronavirus (SNG). DME will be used as substitute for
Chemicals Inc. and state-owned oil and outbreak. LPG.   The coal gasification project was
gas firm PT Pertamina to follow up the targeted to start operation in 2022. It will
proposed project amid the global Covid-19 As previously reported, PTBA, have capacity of 400,000 tons of DME per
pandemic. Pertamina, and Air Products and year, and 50 mmscfd of SNG, PTBA said
Chemicals Inc signed an agreement in in a 2018 statement.

CA | Boim

31COAL ASIA JULY 25 - AUGUST 25, 2020

[COALNEWS]

CA | Khalsa

Chinese firm eyes E. Kalimantan railway project
C hina Railway Liuyuan Group
Co Ltd has expressed interest According to the Committee for commodity transport to ensure
to develop a 203-km railway for the Acceleration for Priority economic feasibility.
project in East Kalimantan Infrastructure Facilities (or KPPIP), the
Province, according to a local government East Kalimantan railway project has a Russian Railways said in July of 2017
official. total length of 203-km with estimated that its Indonesian subsidiary PT Kereta
investment of Rp 53.3 trillion. Api Borneo (KAB) will develop a total of
“A construction services firm from 575-km railway tracks in East Kalimantan
China, China Railway Liuyuan Group Co, The railway project will connect Province that would initially transport the
Ltd (CRL) has expressed interest to invest coal and palm oil producing regions in province’s key commodities particularly
in infrastructure (development) in East East Kalimantan including Kutai Barat coal and palm oil.
Kalimantan,” East Kalimantan provincial Regency, Paser Regency, Penajam Paser
government Spokesman M. Syanafudin Regency, and Balikpapan Mayoralty.  President Director of KAB, Sergey
told news portal bisnis.com. Along the railway, there will be supporting Kuznetsov said at the time that there will
infrastructures such as station, coal jetty, be two train tracks: the Northern line of
He added that the Chinese investor port and a 15 MW power plant. 305-km and the Southern line of 270-km.
was supposed to make presentation in East
Kalimantan in March, but canceled the The report did not say why Russian The Northern line will connect the
meeting due to the Covid-19 pandemic. Railways backed down from the project Tabang area in Kutai Kartanegara, with
and did not complete the feasibility study.  Maloy in the coast of East Kutai, while
The provincial administration has been But it was reported that the Russian the Southern line will start from Melak
looking for new investors for the key railway firm had previously requested for the in West Kutai and end in Buluminung
project after Russian Railways backed down railway project to also facilitate passenger in the Penajam Paser Utara area, where
from the project, the report said. transport instead of specifically dedicated export port and coal stockpile are being
developed.

32 COAL ASIA JULY 25 - AUGUST 25, 2020

Govt revises downward However, Wafid noted that there is Mandiri Utama (BUMA) delivered slightly
domestic coal demand target positive growth from other industries, higher overburden (OB) removal and coal
such as smelting and processing industry. getting volume in June of this year.
The government revises downward the Before COVID-19, the coal consumption
domestic coal consumption estimate this from this sector was estimated at 16.5 DOID said in a statement that BUMA
year from initial target of 155 million tons million tons, but later it is revised upward recorded 29.1 million bcm of OB removal
to 145.6 million tons due to the COVID-19 to 23.9 million tons this year. and 3.7 million tons of coal getting in June
pandemic which has caused lower 2020, reflecting an increase of 1 percent
electricity consumption. “The increase of coal demand and 2 percent YoY for OB and coal,
from smelting and processing industry respectively.
“The projection of domestic coal is supported by new data that shows
demand is lowered from 155 million tons Indonesia Weda Industrial Park starts “Rainfall is higher slightly from
to 145 million tons,” M. Wafid, Director operation,” Wafid said. previous month but was lower than June
of Coal and Mineral Development 2019,” the company said.
Program at the Directorate General of The government sets initial total
Mineral and Coal, said. national coal production target at The company said that year to date,
550 million tons this year, of which production volume totaled to 168.4 million
Coal-fired power plants remain the 395 million tons were dedicated for bcm of overburden removal and 22.3
largest domestic coal consumer and state- export market and 155 million tons for million tons of coal, which declined by
owned electricity firm PT PLN (Persero) domestic markets. 12 percent and 8 percent, respectively,
alone was expected to consume about compared to previous year, on the back of
108 million tons of coal in 2020. Yet DOID reports higher June weaker coal market.
after COVID-19, the government revises production
downward the coal demand from PLN’s The company said it is focused
coal-fired power plants to 87.59 million IDX-listed coal mining services on optimizing existing assets and cost
tons. The lower coal consumption by PLN company PT Delta Dunia Makmur Tbk. reduction through right-sizing of its
is because some coal-fired power plants (DOID) said its primary and wholly- capacity and continuous improvement in
are operating at less than optimal level. owned subsidiary, PT Bukit Makmur productivity and efficiency to maintain
profitability.

CA | Khalsa

33COAL ASIA JULY 25 - AUGUST 25, 2020

[COALNEWS]

Toba Bara considers lowering CA | Boim
coal output

IDX-listed coal mining and energy
company PT Toba Bara Sejahtra Tbk
(TOBA) is considering to lower its
initial coal output target this year of 4-5
million tons.

In the first half of 2020, Toba Bara
produced 1.1 million tons of coal, or
10 percent higher than in the previous
same period. “If possible, we may reduce
the production target,” Pandu Sjahrir,
Director of Toba Bara, said to petromindo.
com without elaborating on the revised
volume target.

Toba Bara, according to Pandu, had
always maintained relatively flat output
target in the previous years. In 2019, the
company produced 4.5 million tons of coal
and sold 4.2 million tons of coal.

Toba Bara produces coal from three
adjacent concessions namely PT Adimitra
Baratama Nusantara, PT Trisensa Mineral
Utama and PT Indomining. The total
concessions area is 7.084 hectares with
63.9 million tons of coal reserves based
on JORC Report 2018. The company
produces coal with quality ranging from
4,800 to 5,900 kcal/kg (GAR).

MEK to source high CV coal requires 1 million tons of coal feedstock coal in Bulungan. 
requirement from domestic per year, including 500,000 tons of low MEK is the first semi-coke producing
market rank coal with calorific value of 3,100
kcal/kg to be blended with another company in Indonesia, earning a
PT Megah Energi Khatulistiwa 500,000 tons of high rank coal with pioneering status from the Ministry of
(MEK), a subsidiary of North Kalimatan calorific value of 6,300 kcal/kg. Industry, which entitles the company to
coal firm PT Energy Nusa Mandiri get tax holiday facility, and exemption of
(ENM), will source its future high CV coal Tria said that in the initial phase of import duty for plant equipment imported
requirement for the production of semi the production, the company imported from China, Tria said.
cokes from the domestic market. the high CV coal requirement.  However,
going forward, MEK would source the The US$81 million semi-coke plant also
This was said by Tria Suprajeni, high CV coal requirement form the produces by products including tar/MFO
Director of Business and Development at domestic market, she added. and coke oven gas.  The tar/MFO production
MEK, which in March started commercial volume is 50,000 tons per year.  The coke
production of semi cokes at its plant in The company secures the low CV oven gas output can be used to a 30 MW fuel
Bulungan, North Kalimantan Province. coal requirement from its parent ENM, power plant.  Tar can be used as material in
which through subsidiary PT Pesona the production of coal briquette and also can
The MEK semi-coke plant has Khatulistiwa Nusantara, produces low CV be further processed into MFO.
installed production capacity of 600,000
tons of semi cokes per year.  The plant

34 COAL ASIA JULY 25 - AUGUST 25, 2020

Govt encourages development of coal downstream industry

T he government is encouraging 100,000 tons per year of asphalt through Lampung Province, each with capacity of
the country’s coal miners coal feedstock of 500,000 tons per year.  20,000 tons per year (feedstock 40,000
to enter the downstream The asphalts are also absorbed by the tons per year), and 7,000 tons per year
business of the sector in a bid eastern Indonesia market,” Sujatmiko said (feedstock 12,000 tons per year). 
to help expand domestic demand for the to Petromindo.com.
commodity amid shrinking global demand Sujatmiko said that the Indonesia coal
and generate greater added value.  He said that following the successful briquette market potential is estimated at 3
production of asphalt by KPA, coal million tons per year, particularly driven by
Sujatmiko, Director of Coal miners are expected to be encouraged demand from small and mid-scale businesses
Development and Management at to enter the coal downstream business as alternative to fuel oil and LPG.
the Ministry of Energy and Mineral including coal gasification, coking coal
Resources, said that the development production, underground coal gasification, Meanwhile, PT Megah Energi
of coal downstream industry forms part coal liquefaction, coal upgrading, coal Khatulistiwa (MEK), a subsidiary of
of strategy to help deal with declining briquetting, and coal slurry/coal water North Kalimantan coal firm PT Energy
demand for coal in the export market mixture Nusa Mandiri, has started commercial
particularly amid the current pandemic production of semi-coke.
triggered global economic recession.  Sujatmiko said that South Sumatra-
based coal firm Thriveni has also started MEK’s Director of Business and
“In a situation where coal demand at producing coal briquette in the province Development, Tria Suprajeni said that
home and in the international (market) is at a volume of 85,000 tons per year, with the semi-coke plant, located in Bulungan
declining, the coal downstream industry feedstock volume of 130,000 tons per year. Regency, North Kalimantan, would need
is one of the diversification strategies coal supply of one million tons to produce
that can be implemented to help keep the He said that the Thriveni production 600,000 tons of semi-coke.  “We started
(domestic) coal industry alive,” he said. capacity is considered small considering commercial production in March 2020,”
the sizeable domestic coal briquette he said recently.
Sujatmiko said that one the emerging market.  He added that the government has
coal downstream industry players is PT asked Thriveni to expand capacity.  He said that the company would
Kartika Prima Abadi (KPA), which has blend 500,000 tons of low rank coal with
started production of asphalt made from Another coal miner which has also calorific value of 3,100 kcal/kg with
coal in Buton, Southeast Sulawesi Province. started coal briquette production is state- another 500,000 tons of high rank coal
controlled PTBA Tbk in Tanjung Enim, with calorific value of 6,300 kcal/kg.
“KPA has succeeded in producing South Sumatra Province, and in Tarahan,
Last year, Indonesia imported 1.09
CA | Khalsa million tons of semi cokes used as fuel for
processing and refining metal materials.

Sujatmiko said another company
called PT Prima Coal Chemical in Barito
Timur, Central Kalimantan, has also
started production of semi coking coal at a
volume of 36,000 tons per year with coal
feedstock of 180,000 tons per year.

Meanwhile, PT ZJG Technology
in Bulungan has started coal upgrading
business with capacity of 100,000 tons
per year.

Sujatmiko said that there are a number
of other companies which are planning to
enter the coal downstream industry and are
currently at the stage of either feasibility
study or pilot project.

35COAL ASIA JULY 25 - AUGUST 25, 2020

[COALNEWS]

CA | Khalsa

ICMA expects much lower market amid lockdown policies applied in Trubaindo mines.
domestic coal consumption export destination countries. “However, due to the global

Domestic coal consumption volume Chairman of the Indonesia Mining economic uncertainty, Indo
this year is estimated to reach only Experts Association (or Perhapi), Rizal Tambangraya will prioritize on
100 million tons, much lower than the Kasli also said that coal DMO volume important expenditure to support the
government’s coal domestic market this year is expected to be lower than the company’s operations,” he said.
obligation (DMO) volume target of 155 government’s initial target due to declining
million tons. electricity consumption. In the first quarter of this year,
ITMG booked coal sales volume of 5.8
Executive Director of the Indonesia He added that this is also due to delay million tons, down from 6 million in
Coal Mining Association (ICMA) Hendra in the completion of a number of coal- the same period of last year. Yulius
Sinadia said that the much lower coal fired power plants, initially scheduled for said that the lower sales volume was
consumption was primarily due to lower this year. attributed to a number of factors
electricity consumption amid the Covid-19 including bad weather condition.
pandemic and the implementation of large- ITMG utilizes 11.4% of 2020
scale social distancing (or PSBB) policy in capex plan He said that the company so far
a number of regions. has not revised its original 2020 coal
IDX-listed coal mining firm PT Indo production target. As previously reported,
Hendra was quoted by Bisnis Tambangraya Megah Tbk (ITMG) had ITMG plans coal production of 19
Indonesia as saying that the lower utilized US$5.6 million, or 11.4 percent of million-20 million tons.
electricity consumption has prompted its 2020 capital expenditure plan (capex)
state-owned electricity firm PT PLN, the of $49.9 million, in the first quarter. Yulius said that sales volume this year
largest coal consumer in the country, to cut is targeted at 22 million tons. Previously,
down its coal consumption. Coal demand ITMG Director of Investor Relations the company said that sales volume was
from independent power producers and Yulius Gozali was quoted by news portal targeted at 22.4 million-23.5 million tons.
other domestic industries are also expected kontan.co.id as saying that the capex was
to decline. used to finance the purchase of equipment ITMG produces coal from a number
and machinery as well as to help finance of coal concessions in Kalimantan, namely
Hendra said that several coal miners the development of hauling roads and PT Indomindo Mandiri, PT Trubaindo
have actually prioritized the domestic port at the company’s Bharinto and Coal Mining, PT Bharinto Ekatama and
PT Jorong Barutama Greston.

36 COAL ASIA JULY 25 - AUGUST 25, 2020

37COAL ASIA JULY 25 - AUGUST 25, 2020

[COALNEWS]

Govt to boost metallurgical tons with very high calorific value of 250 32 locations in Sumatra. The other six
coal exploration million tons. High rank coal has CV of remaining areas are located in Papua and
6.700 – 7.100 kcal/kg, while the very high Sulawesi.
The government is expected to coal has CV of higher than 7.100 kcal/kg.
boost exploration activities to unlock the Reclamation may be
country’s metallurgical coal potential in “We will detail exploration activities considered in approval of
anticipation of increasing future demand in the two categories of metallurgical coal RKAB
for high rank coal from mineral smelting to support the increasing metallurgical
and processing facilities. demand from smelters,” Sudjatmiko, The government hinted that
Director of coal business development at reclamation activities by mining
Data from the Geological Agency the Directorate General of Mineral and companies may be included as one of
shows that the country’s resources of high Coal said. considerations in the approval of the
calorific value coal stood at 19.9 billion Budget and Work Plan (RKAB). The
tons while the very high calorific value at He said that the ministry recorded that Mining Law No 3/2020 Article 99 obliges
2.5 billion tons. there are currently 137 areas containing mining permit holders to conduct proper
metallurgical coal under which 98 areas balance between operating mining areas
Meanwhile, the country’s total reserve located in Kalimantan with another and reclamation areas.
of high calorific value is only at 1.8 billion
“Reclamation activities may be
CA | Khalsa considered in granting RKAB for the
following year,” Sujatmiko, Acting
Director of Technical and Environment
of Mineral and Coal at the Directorate
General of Mineral and Coal, said.

Mining Law No 3/2020 Article 161B
stipulates punishment for miners which
are unable to comply with environmental
regulations, including reclamation
obligation, post-mining activities and
payment of reclamation guarantee fund.
These recalcitrant miners will be subject
to criminal sentence of 5 years in jail and a
fine of up to Rp100 billion.

Based on the government data, there
are currently 248,652 hectares of operating
mining areas in Indonesia. “There are
82,476 hectares of reclamation areas,”
Sujatmiko said. In 2019, the realized
reclamation area was 8,296 hectares
and the government sets target of 7,000
hectares reclamation areas in 2020.

The government encourages miners
to develop ex-mining areas, such as
voids, into productive areas such as for
water tourism, fresh water resources and
aquacultures. Mining companies may also
utilize post-mining areas for renewable
energy development, such as palm oil
plantation, photovoltaic and biomass.

38 COAL ASIA JULY 25 - AUGUST 25, 2020

He said that the economic calculation
was made based on targeted capacity
production of 500,000 tons of semi cokes
per year. With a capex of $76.4 million,
the internal rate of return would be about
20 percent with net present value (NPV) of
$40.4 million.

“Based on economic indicators, semi-
coke technology is commercially viable,”
he said.

Last year. Indonesia imported 1.09
million tons of semi cokes used as fuel for
processing and refining metal materials.

PT Megah Energi Khatulistiwa is the
first Indonesian company to have been
using carbonizing technology to produce
semi cokes.

CA | Boim Weak price to hamper RI’s
coal export to China
Sakari plans new mines to operation and marketing, which we plan
start production in 2022 to start operation in the new concessions Indonesian export of low rank coal to
by 2022,” the company said without China could be hampered this year if the
Singapore-based firm Sakari giving details. current low price persists, an analyst said.
Resources Limited expects its new  coal
mines in  Penajam, East Kalimantan Sakari produced  7.7 million tons Market Research Manager of Adaro
Province, to become operational in 2022. (MT) of coal from its two mines in Coaltrade Services International, Patricia
Indonesia in 2019, namely from Jembayan Lumbangaol argued that in terms of
In May 2019, Sakari acquired a mine in East Kalimantan (7.2 MT) Bahari market, Indonesian coal with its unique
100 percent stake in two greenfield Cakrawala Sebuku in South Kalimantan quality of low sulphur and low ash has
concessions located in East Kalimantan, (0.5 MT). traditional demand from China’s power
PT Sentika Mitra Persada (PT SMP) and plants.
PT Mutiara Kapuas (PT MK) (together Semi coke technology
known as Penajam mine). commercially viable: Govt “I think the problem now is not
that Indonesia is difficult to export to
According to the company’s  Annual Minister of Energy and Mineral China. But the problem is the (coal)
Report 2019 released recently, the Resources’ Special Staff for Mineral and price. Because if the current (price) stays
estimated coal reserve of PT SMP is 12.8 Coal Governance, Irwandy Arif said that at US$23 per ton, it would hurt much
million tons  plus potential upside from PT technology to produce semi cokes is now Indonesian coal producers,” she told a
MK, which requires further exploration commercially viable in Indonesia to help webinar on China Coal Market Outlook
and drilling. meet the expected growing demand from organized jointly by Petromindo.com and
domestic smelting facilities. CoalAsia Magazine.
 “The acquisition of Penajam mine
could also enhance the variety of The so-called carbonizing technology “So even though we have superiority
coal product specification for Sakari. blends low rank coal with high rank coal of coal, it would be very difficult to meet
Currently we are working on a full work to produce semi cokes and by products the demand (in China) if the price is not
plan from exploration, construction, such as coal tar and coke gas. workable.”

A number of Indonesian miners
have complained that the current price
of low rank coal was already below their
production cost.

39COAL ASIA JULY 25 - AUGUST 25, 2020

[COALNEWS]

CA | Boim

RI coal export to China increases 13%
I ndonesia was still the biggest coal
exporter to China in the first six- policy China’s government is expected number of China’s end users had few coal
month of this year with a 13 percent to adjust its coal import policy this year import quota during peak seasons.
increase compared to the same by accommodating China’s end users
period in 2019. Indonesian coal accounted demand of coal during peak seasons. It “The government issues import
for 50 percent of China’s total coal import is based on the recent internal meeting of quota in the beginning of the year, then
in the first semester of 2020 the National Development and Reform many end users deal with backlogs in the
Commission (NDRC), China’s top beginning of the year. But when summer
“From Jan-Jun, China imported 87.1 economic planning agency. and winter comes, there’s not much quota
million tons of coal from Indonesia, left,” she said.
+13.5% rise from last year,” Jimmy Deng, “China will accommodate the import
Vice General Manager of China Coal policy based on seasonal demand, they From January to June 2020, China
Solution (Singapore) PTE LTD told a will probably give more import quota for imported 174 million tons of coal, 12.7
webinar on China Coal Market Outlook, end users during peak seasons, which are percent higher than the previous period.
organized jointly by Petromindo.com and summer and winter, and tighten the import From Indonesia alone, China imported
CoalAsia Magazine on July 15. quota during weak seasons,” Meng Meng, 87.1 million tons of coal during January to
Principal Research Analyst – China of IHS June 2020, or 13.5 percent higher than the
He said that China imported a total of Markit, said during webinar held jointly by previous period.
174 million tons of coal from January to Petromindo.com and CoalAsia Magazine.
June 2020, an increase of 12.7 percent from Coal import quota by China’s
last year. China imported 137.6 million tons The import policy adjustment, government, according to Meng Meng, is
from Indonesia in 2019, increased from the according to Meng Meng, is made more about the government’s priority to
previous year of 125.6 million tons. following problems resulting from in stabilize domestic coal prices, providing
the implementation of coal import quota stimulus for economy and support local
China expected to adjust coal import policy in recent years. Meng Meng said a power utility companies rather than
controlling coal import volume.

40 COAL ASIA JULY 25 - AUGUST 25, 2020

China and Vietnam could China had imported nearly over 20 million companies to revise downward,” Irwandy
help absorb coal oversupply tons …,” she said. Arif, Special Staff of Minister of Energy
and Mineral Resources said.
China and Vietnam are seen to be the She, however, questioned on whether
only importing countries that could help China could reach its 2017 level of coal As of July 16th, 2020, the realized
absorb the current oversupply of coal import. national coal production volume was
in the global market thanks to the two 291.24 million tons, or 52.95 percent of
country’s better economic recovery after China imported about 270 full-year production volume target of 550
the outbreak of Covid-19 pandemic. million tons in 2017. million tons, according to ESDM data.

“We see China is one of the countries Coal miners propose upward revision “But there is not yet any confirmation
that can help absorbs the current coal of production target whether these proposals are going to be
oversupply in the market,” Patricia granted or not,” Irwandy, who is also
Lumbangaol, Market Research Manager There are 30 coal mining companies Chairman of Indonesia Mining Institute
of Adaro Coaltrade Services International that have submitted proposal to the (IMI), said.
told a webinar on China Coal Market Ministry of Energy and Mineral Resources
Outlook organized jointly by Petromindo. (MEMR) to revise upward their coal The proposals were submitted amid
com and CoalAsia Magazine. production target this year. calls from the Indonesia Coal Mining
Association (APBI) to cut the country’s
She said that the other importing Based on the MEMR Regulation No production this year by 50 million tons
countries like India, South Korea and 7/2020, mining companies are allowed to tame the oversupply situation in the
Southeast Asia would reduce their intake to propose for revision of their respective market and help stabilize falling coal price.
of coal. 2020 Budget and Work Plan including
revising upward the production plan. Irwandy also mentioned key messages
“But if we look at China even though of the Minister of Energy and Mineral
they have been announcing or escalating “There are 32 (coal mining) companies that the national coal production has to
about the import quota issue, but what that have already proposed RKAB revision, consider the supply-demand balance and
happened in the past five months is that of which 30 companies proposed to revise avoid disrupting the prices.
upward (their 2020 output plan) while two

CA | Khalsa

41COAL ASIA JULY 25 - AUGUST 25, 2020

[COALNEWS]

CA | Boim

Toba’s 1Q coal output at 1.1m tons as selling price falls
I DX-listed coal mining firm PT Toba
Bara Sejahtra Tbk said that in the the decline in NEWC Index over the revenue from construction of Sulbagut-1
first quarter of this year (1Q20) it same period. and Sulut-3 power plant projects (based
produced only 1.10 million tons of on accounting treatment PSAK 72).
In 1Q20 the company predominantly Construction revenue recognized for
sold its coal to China, India, Malaysia and

coal, compared to full-year target of 4 Bangladesh, representing 82.3 percent of both projects during 1Q20 stood at $78.4

million-4.5 million tons, as average selling sales volume. million.

price fell. As a percentage of total customer base, Cost of goods sold rose by 54.6

The company said in a statement the composition of traders and end-users percent y-o-y, as a result of higher

that the 1Q20 output was generated in 1Q20 came in at 70.0 percent and construction cost of Sulbagut-1 and

by all three mining subsidiaries of PT 30.0 percent, respectively, compared to Sulut-3 power projects. Construction cost

Adimitra Baratama Nusantara (ABN), PT 58.1 percent and 41.9 percent in 1Q19, during 1Q20 was realized at $63.8 million.

Indomining (IM), and PT Trisensa Mineral respectively, in line with the company’s A 73.0 percent y-o-y increase in

Utama (TMU), contributing 0.60 million objective to increase the composition of EBITDA to $30.1 million in 1Q20 from

tons, 0.19 million tons, and 0.31 million end-user customers. Major international $17.4 million in 1Q19 increased EBITDA

tons, respectively. traders and end users, such as major margin from 15.8 percent to 18.0 percent

ABN remained as the largest regional power generation companies, over the period.

contributor to the company’s overall accounted for the company’s main Toba said that after taking into account

production volume, accounting for 54.5 customers. As of 1Q20, a mix of 4900 finance cost of $ 5.9 million and tax

percent of total 1Q20 production, followed GAR and 5200 - 5600 GAR coal still expense of $3.5 million, it booked total

by TMU and IM at 28.2 percent and 17.3 accounted for the company’s largest profit for the period of $28.1 million in

percent, respectively. product composition. Around 60.6 percent 1Q20, a 183.8 percent y-o-y increase from

Toba said quarterly stripping ratio of total sales volume by product was the previous year.

(SR) and y-o-y SR were higher by 10.9 contributed by 5600 GAR, 23.3 percent Gross profit margin was lower

percent than in 4Q19 and by 1.3 percent by 4800 and 4900 GAR, 13.0 percent by y-o-y from 19.6 percent in 1Q19 to

than in 1Q19, respectively, due to pre- 5200 GAR, 3.1 percent by 5400 GAR and 18.3 percent in 1Q20, despite EBITDA

stripping activities at TMU during 1Q120. 5700 GAR. margin and operating profit margin was

The company said average selling The company said its recorded sales higher y-o-y from 25.8 percent in 1Q19

price (ASP) decreased by 13.9 percent of US$167.1 million in 1Q20, or 52.2 to 18.0 percent in 1Q20 and from 14.8

y-o-y from US$ 67.4 per ton in 1Q19 to percent higher compared to that in 1Q19, percent in 1Q19 to 22.0 percent in 1Q20,

US$ 58.0 per ton in 1Q20, in line with stemming from much higher recognition of respectively.

42 COAL ASIA JULY 25 - AUGUST 25, 2020

Mitrabara keeps production has been contracted and the company pandemic, net income for the quarter
flexible amid slowing market will be cautious to sell the remaining soared by 45 percent versus 2019 first
uncontracted volume. “If the price is quarter. “This is a result of a combination
IDX-listed coal miner PT improving, we will sell our uncontracted of continuous cost reduction and strategy
Mitrabara  Adiperdana  Tbk  expects coal. We expect the market will improve to sell coal at fixed price,” he said, adding
production and sales this year to hover in the fourth quarter,” he said. that the company has communicated with
between 3.5 million-4 million tons (MT), the contractors and other vendors to work
depending on market condition in the In the first few months of this year together to reduce costs, especially during
fourth quarter 2020. when the coronavirus pandemic hit, the the pandemic time.
company had anticipated that demand will
CEO Widada told Petromindo.com weaken and had taken steps to seek buyers Domestically, Mitrabara sells some
in a recent interview that Mitrabara has for the coal at fixed price. “Fortunately, we of its production to East Java power plant
production capacity of around 4MT per were able to lock volume and price for the Paiton Energy, and the remainder to the
annum and until the first half of the year, first and second quarter to meet production export market, mostly China, South Korea,
it has produced more than half of the targets,”, he said. Vietnam, Malaysia and the Philippines.
targeted production plan. According to its
2019 Annual Report, the company sold 4.4 According to Widada, the company The company produces medium CV
MT in 2019. sold 1.2 MT in the first quarter of this coal with low ash and low sulfur from
year, up from 1.1 MT in the same its mine in Malinau Regency, North
Widada said that for this year, quarter of previous year, and despite the Kalimantan.  
approximately 80 percent of the capacity

CA | Boim CCS imports 11 million tons
of Indonesian coal

Chinese biggest coal importer, China
Coal Solution (CCS) has imported about
10 million tons of coal from Indonesia in
the first six-month this year.

In addition, the company also imported
one million tons of coal aimed for markets
outside China.

“From January to June, my company,
China Coal Solution imported 10 million
tons of coal from Indonesia to China
and another one million tons to non-
China markets,” Jimmy Deng, Vice
General Manager of China Coal Solution
(Singapore) PTE LTD told a webinar on
China Coal Market Outlook, organized
jointly by Petromindo.com and CoalAsia
Magazine on July 15.

He said that of CCS’ total import,
about 44 percent of coal have calorific
value of GAR 3800 – GAR 4200 and 26
percent of GAR 48000 – GAR 52000.

Jimmy did not elaborate the
company’s import volume target for
this year. The company previously told
Petromindo.com that CCS imported 18
million tons of coal in 2019.

43COAL ASIA JULY 25 - AUGUST 25, 2020

[COALNEWS]

MEK starts commercial coke is suitable for smelting facilities volume. Our intent is to closely monitor and
production of semi-coke using rotary kiln electric furnace (RKEF) strengthen position in other Asian markets,
technology. exercise strict control over costs, improve
PT Megah Energi Khatulistiwa, a operating efficiencies and take every
subsidiary of PT Energy Nusa Mandiri, Bumi seeks to increase export precaution during present pandemic to
has started commercial production of to S. Korea maintain normalcy in production,” he said
semi-coke with a target to produce
600,000 tons of semi-coke this year. IDX-listed coal giant PT Bumi According to Srivastava, actually
Resources Tbk is looking to increase there are no new markets at this time for
MEK’s Director of Business and export to South Korea amid signs of rising his company, but there could be volatile
Development, Tria Suprajeni said that demand in the country.  demands due to technology changes and
the semi-coke plant, located in Bulungan shifts to or from renewables.
Regency, North Kalimantan, would need “South Korea, on going. It is one
coal supply of one million tons to produce country presently amongst so many others “For example, coal gasification,
600,000 tons of semi-coke.  “We started indicating some support in coal demand,” cleaner coal burn technologies, post
commercial production in March 2020,” Dileep Srivastava, Director and Corporate carbon capture & storage scenario. Even
he said. Secretary of Bumi said to Petromindo.com Germany which has announced total shift
without providing details. away from coal and nuclear, has said they
He said that the company would are considering extended use of coal till
blend 500,000 tons of low rank coal with Srivastava said that Indonesia, China 2038,” he explained.
calorific value of 3,100 kcal/kg with and India remain the company’s main
another 500,000 tons of high rank coal markets. Bumi has decided to maintain its
with calorific value of 6,300 kcal/kg. 2020 coal production guidance of 85
“Conditions are presently turbulent, million to 90 million tons despite the
MEK is the first semi-coke producing sector conditions are depressed, coal price weakening demand and falling price of the
company in Indonesia. is falling.  The challenge is more on the commodity.
falling coal price, not so much on the
The company said that the semi-

CA | Boim

44 COAL ASIA JULY 25 - AUGUST 25, 2020

CA | Khalsa

PTBA interested to acquire ex-concession of AKT
S tate-controlled coal miner
PT Bukit Asam Tbk (PTBA) because it had signed an agreement to said, is the final legal decision over the
is interested to acquire the provide guarantee on a loan facility fate of the ex-AKT concession.
former coal concession provided by Standard Chartered Bank to
of metallurgical coal firm PT Asmin its parent IDX-listed PT Borneo Lumbung In January of last year, AKT filed
Koalindo Tuhup (AKT) in Murung Raya, Energi & Metal Tbk. The signing of the a lawsuit with the state administrative
Central Sulawesi Province. corporate guarantee was made without court (PTUN) in Jakarta, challenging the
written approval from the minister, which ministry’s decision to terminate its PKP2B
PTBA President Director Arviyan is considered as a breach of the PKP2B coal contract. The court in March ruled in
Arifin was quoted by Kontan as saying coal contract of work. favor of the company. But a higher PTUN
that the company is currently conducting court overturned this ruling in August,
a review of the business feasibility of the Meanwhile, ministry’s Director of prompting AKT to file a final appeal with
ex-AKT concession including with regards Coal and Mineral Management Program, the Supreme Court, which in November
to reserves and resources potential. “If Muhamad Wafif Agung said that the of last year upheld the ruling of the higher
results (of the review) proves it is feasible Murung Raya concession is currently PTUN court.
in terms of business, we’ll of course take it in the process of being transformed
over,” he said. into so-called special business license On June 27 of 2019, AKT has filed
mining area (or WIUPK).  Once this a request with the Indonesia National
The Ministry of Energy and Mineral process is concluded, the WIUPK can Arbitration Agency (or BANI) to settle
Resources terminated in 2017 AKT’s coal be offered to state-owned companies, its dispute with the Ministry of Energy
contract of work (PKP2B) over Murung local government-owned companies, and and Mineral Resources.  The company
Raya coal concession on grounds that private investors. said that BANI was expected to issue a
the company has breached the contract ruling within six months after its started
Another pending important factor, he deliberating the case.

45COAL ASIA JULY 25 - AUGUST 25, 2020

[COALNEWS]

PTBA penetrates new export “We’re also trying to open new markets in Tambang Rekayasa (DTR) in North
markets amid Covid-19 Pakistan and Malaysia,” he said. Kalimantan.

IDX-listed coal mining company PT Adib also said that the company has Harry Kristiono, Director of MEMI,
Bukit Asam Tbk (PTBA) is seeking for recently secured a new contract with a told Petromindo.com that the existing IUP
new export markets as traditional markets Malaysian customer. “We transported mining license of DTR will expire in early
of China and India have restricted imports the coal from Kertapati Port by barge 2021 at a time when the company’s mine
amid the Covid-19 pandemic. because the distance is not too far,” he still has about three million tons of coal
said, but declined to disclose the new deposits left.
Adib Ubaidillah, Director of customer’s identity.
Marketing of PTBA, said to petromindo. “We have applied for the second
com on Thursday that China has started In 2019, PTBA’s largest export term of IUP license extension with the
restricting coal imports and prioritizing markets were India (14 percent), Taiwan provincial government,” he said.
domestic coal production. In India, the (4 percent), Vietnam (4 percent),
lockdown during the pandemic has shut Thailand (4 percent), Hong Kong (2 “If our annual production reaches at
down the ports. percent) and China (2 percent). In 2020, 600,000 tons, it means we can still operate
PTBA plans to sell 8.3 million tons of for five years.”
“We’ve penetrated new markets such coal for export markets.
as Brunei and Thailand. The volume was DTR is the only coal company in the
not big, but for market penetration, we have Duta Tambang seeks for world producing coal with sulphur content
already made shipment of one to two vessels extension of mining license of 3.5 percent and calorific value of 6,500
during the previous months,” Adib said. kcal/kg.
Coal mining firm PT Medco Energi
In the new markets, PTBA sold coal Mining Indonesia (MEMI) has applied for DTR made the maiden shipment of
to coal-fired power plant in Brunei and the second extension of the IUP mining 38,000 tons of coal in September 2012.
cement factory in Thailand. He declined business license of subsidiary PT Duta
to disclose the identity of the buyers. The company plans to produce about
600,000 tons of coal this year which will
be entirely exported.

CA | Khalsa

46 COAL ASIA JULY 25 - AUGUST 25, 2020

failing to meet the coal production target.
 “We (only) reached about 80 percent

of our 300,000 tons of target in the first
semester,” he told Petromindo in an
interview.

Duta Tambang Rekayasa is one of
MEMI’s coal subsidiaries in the Nunukan
cluster producing coal with sulphur
content of 3.5 percent, the highest in the
world, and calorific value of 6500 kcal/kg.

Hary earlier said that the coal
production schedule of MEMI’s two other
subsidiaries in the Nunukan cluster -- PT
Duta Tambang Sumber Alam (DTSA) and
PT Nunukan Bara Sentosa Satu (NBSS) --
was delayed to the Covid-19 pandemic.

CA | Khalsa PTBA maintains high CV coal
production target
BMH reschedules maiden coal The company has also revised
shipment downward its coal production target this IDX-listed coal mining company
year to only 100,000 tons from the original PT Bukit Asam Tbk (PTBA) said it is
Samarinda-based coal mining firm PT target of 300.000 tons. maintaining its initial production volume
Borneo Mas Hitam (BMH), a subsidiary target of high calorific value (CV) coal
of PT Medco Energi Mining Indonesia DTR coal output reaches 80% this year despite weakening global demand
(MEMI), said that the company has delayed of H1 target due to COVID-19 pandemic.
its first shipment of high-sulphur coal to
October from an earlier schedule of July. North Kalimantan coal mining firm, PTBA plans to produce 2.5 million
PT Duta Tambang Rekayasa (DTR), a tons of 6,100 kcal/kg coal this year and
BMH said that the Covid-19 pandemic subsidiary of PT Medco Energi Mining to export the high CV coal to markets
had forced the company to delay required Indonesia (MEMI), failed to meet its first such as Taiwan and Australia. In 2019,
construction works and coal getting six-month (H1) output target of 300.000 the company produced 3.5 million tons of
activities in its mining sites in Samarinda, tons due to the Covid-19 pandemic. high CV coal.
East Kalimantan Province.
MEMI Director Hary Kristiono said “We maintain our initial production
“We expect the first shipment in that the company’s strict health protocol target for this year,” Adib Ubaidillah,
October, a delay from the previous target in mining site to help prevent the spread Director of Marketing of PTBA, said
in July,” Harry Kristiono, Director of of Covid-19 has been the main cause for to petromindo.com on Thursday, referring
MEMI told Petromindo in interview. to the high CV coal production target.

Adib confirmed that there has been
downward pressure on coal demand in
global markets, including for high calorific
value coal. PTBA keeps looking for new
market potentials both domestic and
abroad.

“Domestic smelter industry is positive,
but we have to be prudent in calculating
the production costs and the prices,”
he said. PTBA owns approximately 50
million tons of high CV coal.

47COAL ASIA JULY 25 - AUGUST 25, 2020

[COALNEWS]

Activists file judicial review CA | Boim
over new mining law
Officials vying for mining DG by some as potential interference to
A group of activists and top regional position the Minister of Energy and Mineral
government officials filed on Friday Resources, who is known to be close to
judicial review over the country’s new Officials are competing for the PDI-Perjuangan.
Mining Law No 3/2020. position of Director General (DG) of
Mineral and Coal at the Ministry of The position of director general is very
The group argued that the Energy and Mineral Resources which strategic and important this time as the
deliberation process of the new mining has been left vacant after Bambang Gatot new director general will have to deal with
law, which was approved by the House Ariyono retired earlier this year. the implementation of the new mining
of Representatives in May and has been law, which transfers power to regulate
effective since the past month, lacked Selection committee has qualified the mining industry back to the central
transparency and failed to comply with a six officials to compete for the position, government, and contract extension of
number of law-making rules. Petromindo sources said. coal concessions controlled by politically
connected businessmen.  
They also said that there was Sources said one of the strongest
lack of involvement of the Regional candidates is Ridwan Djamaluddin, who “The position requires not only
Representatives Council (DPD) in the currently serves as deputy at the Office of technical knowledge about the
deliberation process of the new mining Coordinating Minister of Maritime Affairs mining industry, but also political
law, which is an amendment to the and Investment, where President Joko and communication skill to balance
previous Law No 4/2019. Widodo’s (Jokowi) trusted aide Luhut stakeholders interests,” one source said.
Binsar Panjaitan is  the minister.
Bangka Belitung Governor Erzaldi Other candidates are Ministry of
Rosman Djohan, which also filed judicial The source said that despite being Energy’s Spokesperson Agung Pribadi,
review, said that under the new mining close to Luhut, Ridwan has yet to secure Director of Coal Development and
law, the entire licensing authority has been approval from the ruling party PDI- Management Sujatmiko, current  Director of
transferred to the central government, thus Perjuangan.  Another source said that Coal Yunus  Saefulhak, and  two others.
undermining the regional autonomy power Ridwan’s closeness to Luhut is considered
of local administrations.   Bangka Belitung
is the country’s main tin producing
province.

Indonesia, a major exporter of thermal
coal, tin, nickel and copper, is seeking
to boost investment in the mining sector
by removing red tape and streamlining
regulations through the new mining law.

A judicial review was being requested
because the public, regional governments
and state-controlled companies had not
been involved in deliberation of the bill,
said mining expert Ahmad Redi, one of the
plaintiffs.

“This clearly violated the openness
principle in the legislation process that
should be transparent,” Redi said in a
statement.

Fajar Laksono, a spokesman for the
Constitutional Court, said the court had
received the request and would review it
before considering  schedule for a hearing.

48 COAL ASIA JULY 25 - AUGUST 25, 2020