Govt plans royalty cut for underground coal mining

The government will cut down the royalty tariff of underground coal mining project by up to two percentage points as part of incentives to promote underground mining.

Director General of Mineral and Coal R. Sukhyar was quoted by Investor Daily as saying on Monday that the Ministry of Energy and Mineral Resources has proposed the royalty cut plan to the Ministry of Finance along with the proposed increase in the royalty tariff of IUP coal mining firms.

Underground mining is a relative new method in Indonesia, which creates smaller environmental impact that the most commonly practiced of open pit mining. ?As a pioneer, the government will of course give full attention. We propose for a 2 percent reduction in the royalty tariff,? he said.

As reported by this portal earlier, two coal mining firms PT Merge Mining Industry and PT Gerbang Daya Mandiri plan to carry out underground mining operations in Kalimantan.

Merge Mining Industry is the local unit of China?s Merge Mining Holding Ltd, which operates a 971.2 ha concession in Banjar, South Kalimantan. The company is currently at the phase of construction work with investment plan of US$100 million. Production is expected to start in 2016.

Gerbang Daya Mandiri is a local unit of Japan?s Mitsui Matsushima Co Ltd, which operates a 1,758 ha coal concession in Kutai Kertanegara, East Kalimantan. The company is also currently at the phase of construction of underground mining facilities with investment of US$73 million. Commercial production is projected to start in 2017 with capacity of 1 million tons per year. (*)