DMO regulation for coal miners to be issued next month

The Energy and Mineral Resources is set to issue the regulation on the domestic market obligation (DMO) for the country?s coal mining companies next month under which the firms will be required to sell between 20 and 30 percent of their production to the local market.

The ministry?s Secretary General of Mineral, Coal and Geothermal Resources Bambang Setiawan said in Jakarta on Tuesday that the DMO regulation would be applied to the country?s coal of contract work (CCoW) holders and would come into effect next year.

Bambang said that the portion of the coal miners? production that has to be sold in the domestic market had not been fixed, but he estimated that it would be about 20 and 30 percent of the production.

According to him, the amount of the coal production which has to be sold in the local market would be adjusted every year depending on the demand.

Bambang estimated that the amount of coal to be sold under the DMO scheme would reach 68 million tons next year, or about 28.8 percent of the total production in that year which is expected to reach 236 million tons.

He said that 41.18 million tons of the total would be supplied to state-owned electricity company PT Perusahaan Listrik Negara (PLN) while the remainders would be absorbed by other industrial buyers.

According to him, for the coal miners whose production is not suitable for the domestic buyers, the ministry would consider offering a quota transfer option under which they will be allowed to buy from other miners to meet the DMO quota. It will be also possible that the ministry will still accept such type of coal and blend them with those which meet the requirement, he added.

He said that the prices of coal to be sold under the DMO scheme would be fixed by the government based on international price references such as International Coal Index (ICI), Barlow Jonker, Platts and Global.

The Mining Contract (KP) holders will be exempted from the obligation until after the government has a complete list of KP holders and the central and local governments agree on a joint regulation governing this type of miners.(*)