Indonesian Coal Industry Facing Problems

Forbes reported that low coal prices, China’s proposed import ban on low-quality coal and the Indonesian government’s hunt for more tax revenue from the fuel are presenting problems for Indonesian coal miners.

As quoted in the market news:

Around one-fifth of annual imports, or 50m tons, would be banned [in China], the FT reports. Naturally the proposed ban is welcomed by struggling Chinese miners who are located inland, far from the coastal cities where electricity demand is highest and seaborne imports are often cheaper to source.

[Indonesia] wants to double the royalty on coal mined under a certain type of local permit, which would most affect smaller producers. Indonesia is the world’s largest exporter of thermal coal and is ramping up production despite sinking prices, with a forecast of 410 million tons this year, up from 375 million in 2012. This is another reminder of how commodity exporting nations are prone to externally-driven booms and busts, and why Indonesia needs to invest more into industry and services if it’s to take its place among Asia’s stronger economies.

Click here to read the full Forbes report.