Indonesia coal tax could cut exports by $11b
Indonesia’s planned coal export tax could devalue its coal business by some $11-billion, research and consultancy firm Wood Mackenzie was reported as saying, Seatrade Asia online reports.
Senior coal research analyst Rohan Kendall said that the introduction of an export tax could cause Indonesia to lose competitiveness when compared with other major supply regions, and could put at risk some 68-million tonnes a year of coal exports.
“Indonesian cash costs have doubled since 2006. This was not an issue while coal prices were rising but now that prices have softened it is important to constrain costs to keep projects viable. Even without the imposition of an export tax, Indonesian coal producers may find it difficult to prevent a continuation of cost increase imposition but additional taxes will further exacerbate cost hikes,” Kendall was cited as saying.
He noted that if an export tax were applied to coal producers, the cash costs of affected mines would increase by an average of $19 per tonne, which translated to an estimated 36% increase in cash costs.
The hardest to be hit would be low-value coal as it tended to have the narrowest operating margins due to price discounts, and the fact that future growth in this segment will be from companies with mining business permits whereas the majority of future growth of other coal types would still be sourced from contract of work permit holders, who were exempt from paying any import or export taxes.
