Minerba issues regulation on benchmark price for reject, fine coal
Thursday, June 12 2014 - 04:41 AM WIB
The Directorate General of Mineral and Coal (Minerba) at the Ministry of Energy and Mineral Resources has issued new Regulation No 480 K/30/DJB/ 2014 on the procedure to determine benchmark price (HPB) for certain types of coal, and for coal to be used for certain purposes.
According to the copy of the regulation, obtained Thursday, certain types of coal include reject coal, fine coal, and coal with certain impurities.
Fine coal is defined as by product of coal mining with diameter of less than 2 millimeters and being sold separately. Coal reject is defined as byproduct of coal mining with certain impurities content because bordering with soil layer or other stones, or residue of washing plant or other production processes. Meanwhile, coal with certain impurities is defined as coal with specifications outside what are generally accepted by the market such as higher sulfur, ash, and or sodium levels.
In determining the price of fine coal or reject coal, miners are obliged to use the HPB (benchmark price) and multiplying it by reduction factor, determined by the directorate general.
Fine coal and reject coal can be sold at price lower than the HPB in the domestic market after obtaining approval from the directorate.
Coal to be used for certain purposes including those used internally by the company, coal undergoing upgrading/value added process, and coal dedicated for community development program.
Miners must follow the HPB formula in determining the price for coal to be used internally plus an operating margin. Pricing of coal to be used for CD program must include production cost, operating margin, and transportation cost.
Editing by Reiner Simanjuntak