Indonesia Sees 11% Drop in Coal Exports

Indonesian coal exports are expected to drop 11 percent this year due to lower production, a government official said on Friday, as miners grapple with new rules the industry fears will put some firms out of business.

Indonesia ships about $2 billion worth of coal a month, one of its largest exports by value and making it the biggest exporter of thermal coal in the world.

But the industry has been hit by falling prices and slowing demand from top consumer China, along with government efforts to cap output, revise trade regulations and tighten law enforcement in the sector.

A drop in coal output could exacerbate the country's current account deficit, which is expected to exceed 3 percent of gross domestic product this year, a concern for the incoming administration of president-elect Joko Widodo.

"We are optimistic we can achieve exports of 310 million tons until the end of the year," coal and minerals director general Sukhyar told reporters, referring to the impact of new export rules due to come into effect in October.

Indonesia produced 421 million tonnes of coal in 2013, according to the government, and exported 349 million tonnes.

"Our expectation for year-end production is about 400 million tons," he said.

Previously, Indonesia forecast coal output this year to be between 397 million and 421 million tonnes.

Sukhyar also said the government would push ahead with a planned increase in royalties for coal sales, and expected a new regulation to be approved before incumbent President Susilo Bambang Yudhoyono steps down in late October.

"We will revise royalties for coal based on calorie content. For low-rank coal the royalty will be set at 7 percent, middle rank coal will 9 percent, and for high rank coal it will be 13.5 percent," he said, without providing further details.

Separately, a trade ministry official said his office has now listed 36 firms as registered exporters, among them some of the country's top producers including Adaro Energy, Berau Coal, Kideco Jaya Agung and state-owned Bukit Asam.

A further 84 firms were expected to be registered soon, the official said.

According to the energy ministry there were around 960 coal firms at a production stage in Indonesia. However, some 900 of these are mining license (IUP) holders that contribute about 80 million tonnes, or approximately 20 percent of Indonesia's total production.

Benchmark Asian coal prices were at $67.45 this week, their lowest since September 2009, having fallen by about 22 percent this year alone.

(Reporting by Wilda Asmarini and Yayat Supriatna; writing by Fergus Jensen; editing by David Clarke)