IMA backs coal production relaxation, welcomes cancellation of mining gross split plan

By Romel S. Gurky

The Indonesian Mining Association (IMA) has welcomed the government's plan to relax coal production limits and supported the decision to cancel a proposed gross split revenue-sharing scheme for the mineral and coal mining sector.

IMA Executive Director Sari Esayanti said the planned coal production relaxation announced by Energy and Mineral Resources Minister Bahlil Lahadalia would help mining companies cope with rising operating costs while supporting state revenue.

According to Sari, coal producers are facing increasing costs as many key operating components, including fuel, heavy equipment and spare parts, are imported and have become more expensive following the strengthening of the U.S. dollar.

"The production relaxation policy is increasingly relevant under the current trend of a stronger U.S. dollar. While export revenues benefit from dollar-denominated coal sales, operating costs have also risen significantly," Sari said in a statement on Monday.

She added that lower production quotas and rising costs have already forced some mines to halt operations, making the proposed relaxation important for maintaining production and employment.

IMA also said higher coal prices, combined with a stronger dollar and more flexible production policies, could contribute positively to state revenue from the mining sector.

Separately, the association welcomed the government's decision to abandon plans to apply an oil and gas-style gross split revenue-sharing mechanism to the mineral and coal mining industry.

Sari said the mining sector has fundamentally different business characteristics from the oil and gas industry, with varying operational and economic conditions across different commodities.

"Mineral and coal mining has unique characteristics and different levels of complexity for each commodity. These differences are why many countries apply fiscal and royalty systems that differ from those used in the oil and gas sector," she said.

IMA said the cancellation of the proposal would help preserve fiscal stability and investment certainty for mining companies at a time when the industry is facing multiple regulatory changes, including the implementation of the one-door export policy, export proceeds retention requirements, royalty adjustments, revised mineral benchmark pricing, export duties and the B50 biodiesel mandate.

The association said consistent and predictable government policies remain essential to maintaining the competitiveness of Indonesia's mining industry and supporting long-term investment in downstream processing and energy transition projects.

Editing by Alexander Ginting