Coal washing not categorized as processing activity: Official

The government reiterated that coal washing to reduce ash level is not categorized as processing activity that generates added value to the fuel commodity, therefore foreign coal miners operating in the country applying coal washing are still required to divest up to 51 percent shares to Indonesian investors.

Bisnis Indonesia quoted Director of Coal Management and Development at the Ministry of Energy and Mineral Resources Adhi Wibowo as saying that a number of coal miners claimed to have applied coal washing, but existing Government Regulation No 77/2014 does not include coal washing as processing activity that provides added value to the coal.

Foreign coal miners engaged in value added creation by processing the coal are allowed to divest only 40 percent of their shares to local investors, while those without processing activity must divest up to 51 percent after five years of production.

The previous Government Regulation No 23/2010 categorized coal washing, coal crushing, and coal blending as processing activities that generate value added.

Meanwhile, Regulation No 77/2014 defines value added processing to include coal gasification, coal upgrading, coke and briquette production, and coal water mixture.

Adhi said that the government is currently in the process of revising Regulation No 77/2014. The Indonesian Coal Mining Association (APBI) has demanded that activities as defined under Regulation No 23/2010 to be categorized as value added coal processing. (*)