The domestic demand of coal is estimated to soar from 62.5 million tons in 2007 to 70.75 million tons in 2008. Consequently, the Government has ruled that a Domestic Market Obligation (DMO) be applied to the industry.
The above was stated in a press release from the Ministry of Energy and Mineral Resources (ESDM) received by this magazine, 27 June 2008. The statement says that the move is in accordance with the stipulations of articles 12 and 13 of the working contract for coal mining, or PKP2B in its Indonesian acronym.
According to the working contract, if the Government falls short to obey the domestic requirement due to a huge increase in the coal demand, contractors are obliged to conform parts or all of their trades to support the domestic needs, based on stipulations and provisions that have been agreed upon, on a condition that it could be so performed without hindering their previous obligations.
The DMO will be applied based on the queries from industry, transportation and electricity sectors. Apart of attempting the move, the Government is also considering to adjust its share of 13.5 percent of the total coal production by the contractors.
Sunday, October 25, 2009
The 10.000 MW Power Plant Under Threat Without DMO Of Coal
The success of a 10.000 MW power plant will be a pawn in a gambling by the SBY-JK government. Up to now, there are no barriers in the investment and space availability. The biggest threat comes from the uncertain supply of coal, since a bigger amount of the energy source is still dedicated for export market.
Sapto Triono Widiastoto, the Secretary of the Committee for the Acceleration of Electricity Development, The State Electricity Company (PLN), said that the project is schemed to reduce the dependency on oil as energy source. When the project was instigated in 2006, the government were relying on the abundance of low-grade coal. Nowadays, even the low-ranked coal are almost nowhere to find since they were already exported. That include those from companies who were at the outset had committed to supply the government with low-grade coal.
Even when the government had threatened the companies to pay a penalty for their inconstant supply of coal, the benefit earned from selling the commodity abroad is apparently still much bigger, that they would willingly pay the mere penalty. This, according to Sapto, could be hindered only through a Domestic Market Obligation (DMO) scheme of coal.
He further mentioned that the current national requirement for coal is about 40 million tons per year. The 35 million tons would be used for the generation of the 10.000 MW power plant, which owes 80% of the total energy sources to coal. For this year only, the government had committed to purchase high-rank coal at the market price of US$ 140.00 per ton. Sapto explained that his side would really hope that the government could implement the DMO scheme as soon as possible.
It is revealed that the government had planned that scheme be implemented as early as next month (September 2008), and that the Indonesian Coal Mining Association (APBI) has showed its support to the government’s plan.
Sapto Triono Widiastoto, the Secretary of the Committee for the Acceleration of Electricity Development, The State Electricity Company (PLN), said that the project is schemed to reduce the dependency on oil as energy source. When the project was instigated in 2006, the government were relying on the abundance of low-grade coal. Nowadays, even the low-ranked coal are almost nowhere to find since they were already exported. That include those from companies who were at the outset had committed to supply the government with low-grade coal.
Even when the government had threatened the companies to pay a penalty for their inconstant supply of coal, the benefit earned from selling the commodity abroad is apparently still much bigger, that they would willingly pay the mere penalty. This, according to Sapto, could be hindered only through a Domestic Market Obligation (DMO) scheme of coal.
He further mentioned that the current national requirement for coal is about 40 million tons per year. The 35 million tons would be used for the generation of the 10.000 MW power plant, which owes 80% of the total energy sources to coal. For this year only, the government had committed to purchase high-rank coal at the market price of US$ 140.00 per ton. Sapto explained that his side would really hope that the government could implement the DMO scheme as soon as possible.
It is revealed that the government had planned that scheme be implemented as early as next month (September 2008), and that the Indonesian Coal Mining Association (APBI) has showed its support to the government’s plan.
Envisioning Energy At A Mine-mouth
There is still a huge gap between the fulfillment and the expectation of domestic energy needs. The cause is thought to be that of energy sources located away from mining areas. Development of mine-mouth power plants has increasingly become a possible solution.
The Governor of Central Kalimantan, A. Teras Narang, was enthusiastic when he presented his ideas during a seminar in Jakarta on Saturday, 13 September 2008. He was accompanied in the seminar by Wahyudin Sitompul, an official at the local State Electricity Company (PLN in its Indonesian abbreviation). The two gentlemen were in a same mission; they came up to the country’s capital to unleash a mega-project on the interconnection for Java - Kalimantan power transfer.
Both confessed to a satisfaction over their presentations in front of the country’s high-level officials. To this end, Mr. Narang along with three other provincial leaders in Kalimantan had splashed a large amount of cash to organize the seminar. Hundreds of participants, most of them of regional bureaucrats, swarmed the Sultan hotel at the center of the country’s capital to be in attendance in the seminar’s discussions.
Mr. Narang took the chance to offer his vision as a regional leader in a speech during the seminar. He mentioned that the abundance of low calorie coal should primarily be devoted to the country’s energy requirements, instead of to the international market. He also pleaded that all stakeholders keep in mind that coal is a non-renewable energy resource. Its ultimate use should fully be aimed to support the country’s development programs.
In an interview with Majalah TAMBANG, Mr. Narang said that the development of mine-mouth power plants is highly viable. He based his statement on a local PLN’s finding which reveals that a per KwH energy would be very much cheaper if a power plants are built next to the coalmines. He laid out the fact that while unrelentingly complaining on providing too high a subsidy to stabilize the national energy price, the central government has been giving too little attention to energy at the mine-mouth proposals.
“Just develop as much mine-mouth power plants as possible. However big the demand from Java is, (they would be prepared) to provide,” he said. He challenged the central PLN’s lasting argument that an energy transmission line to Java is more expensive than inter-islands coal shipping costs. He readily offered a more likely calculation, backed with the unreliable weather situation at the Java sea recently that has proven to be the hindrance to smooth inter-island shippings.
He added that with the most recent technology advances, the energy supply from mine-mouth power plants is very much on the cards. There now remains only the classic issue of whether the government would be willing to consider the new option or to keep the inefficient, extravagant- ongoing practices.
“Central Kalimantan is ready for mine-mouth power plants,” Mr. Narang said in the seminar. To the participants, he explained that there are several spots throughout the province to be chosen as potential energy suppliers for Java island. The province’s Kota Waringin and Kapuas regencies, for instance, are only 310 and 315 kilometres away to Semarang, Central Java and Surabaya, East Java, respectively. This would mean in the perspective of a distance, an interconnection for Java-Kalimantan power transfer is indeed workable.
It is estimated that a Kalimantan - Java mine-mouth power plant interconnection would require a mere 2.3 billion rupiahs, with a break-even point already predicted right after the initial year.
As a conclusion to his speech, Mr. Narang invited all stakeholders to contemplate on the nation’s long-term strategic interests, of 10 to 20 years ahead. “Central Kalimantan is ready to seriously strive for our great nation’s gain. It’s now down to the central (government) to show the same determination,” said the Governor.
The Oddity in the 10.000 MW Energy Project
Meanwhile, a harsh viewpoint was expressed by former South Sumatera Governor, Syahrial Oesman. He pointed to the country’s power policy inconsistency. “South Sumatra was once appointed as the nation’s energy powerhouse. However, the 10.000 MW energy project is to be kicked off in Java,” he said in front of participants at the Association of Indonesian Mining Professionals (PERHAPI) annual gathering in the Horison Hotel in Palembang, South Sumatera on Friday, 25 July 2008.
He mentioned that there is an oddity in the project set off by the VP Jusuf Kalla. Elsewhere in the world, power plants are built at energy sources’ vicinity rather than of the users. South Sumatera is geared-up for a 7,000 MW electricity supply in the initial Sumatera - Java interconnection. Moreover, the province is blessed with the abundance of low-calorie coal, the power plant’s main element, beside of ore and sulphur reserves.
Mine-mouth power plants at the province are already planned the regencies of Banjar Sari (2 x 100 MW), Banko Tengah (4 x 600 MW), Adimas Baturaja Cemerlang (2 x 100 MW), MUBA (2 x 100 MW), MURA (2 x 100 MW), Musi Prima Coal (2 x 100 MW), Sungai Malam (2 x 600 MW and 3 x 100 MW), Muara Enim (4 x 100 MW), Gunung Megang (2 x 100 MW), and Lahat (4 x 600 MW).
“The permit (to commence the development) was never given,” said Mr. Oesman, who stated that all proceedings were already initiated as early as 2005. “All of a sudden, then came the policy to develop (the project) in Java,” revealed the gentleman who lost his incumbency as the province’s Governor last month.
Mr. Oesman asserted that the 10.000 MW project would be much cheaper if developed in South Sumatra. “Coal delivery expenses from Kalimantan to Java in two years time would be enough to develop a Sumatra - Java transmission line,” he said before put out the estimated cost in the region of 1.5 billion rupiahs.
He also stated that in a year the Java sea would only be navigable for a maximum three-month. Earlier this year, operations at Tanjung Jati B power plant at Cilacap, Central Java were halted due to delayed coal delivery thanks to hostile seawater.
The Pursuit of a Grand Scenario
Similar to Mr. Oesman, Jeffrey Mulyono, Chairman of the Indonesian Coal Mining Association (APBI in its Indonesian abbreviation) were downbeat when confessing that on several occasions, he sneered at the PLN for constantly putting sub-standard bargains on the electricity price in previous Java - Sumatera interconnection negotiations. He felt sorry that until now an inter-island transmission line in the country is still lacking.
“To me, it is as if the PLN prefers to continuously burn out diesel fuel,” he said in an interview with Majalah TAMBANG on 18 September 2008, in reference to the state electricity company’s reluctance to immediately consider the option. “If mine-mouth power plant is already at hand now, we can develop (the transmission line) anytime,” added Mr. Mulyono, who also stated that obstacles to the development should not end all initiatives.
He envisioned that the development of mine-mouth power plants in Kalimantan island should be integrated in an industrial areas development scheme. A grand scenario of mine-mouth power plants development, followed by the launching of nearby industrial areas would enhance economy and business growth in the region. This would create a vast job opportunity for the country’s workforce. A train line expansion in the island would also call for a huge need of electricity apart of the demand from the surrounding areas.
Mr. Mulyono praised some mining companies who already instigated their mine-mouth power plants development, such as of PT Adaro Indonesia and Indominco, as well as of Gorontalo and PT Berau Coal, whose small-scale mine-mouth power plants are designed for their own electricity demands. “I’d like to reiterate that mine-mouth power plant is really positive,” added Mr. Mulyono, “If the utilization is broadened, the multipying effect would be overwhelming”.
The Misfortune at Energy Powerhouses
The demand for mine-mouth power plants has increasingly become apparent. Syahrial Oesman is not the only regional leader whose inquiry for energy sources at mine-mouth was rejected by the central government.
As revealed in this magazine’s March 2008 edition, South Kalimantan Governor Rudy Arifin sent a letter to the Minister of Energy and Mineral Resources (ESDM in its Indonesian abbreviation), with copies to the President, the Vice President and the Chairman of the parliament’s Seventh Commission.
The February 2008 letter slammed the then energy crisis at South and Central Kalimantan provinces, which came along after a curtail policy was imposed on the region’s coal. Electricity for residential and industrial purposes was unsteady at best, threatening the regions’ conducive climate for investment. This happened amid both provinces’ claim as the country’s top coal producers.
Of the operational plants in the region, the provinces’ had to do with only 260 MW electricity. Coal producers there preferred to offload their products to markets outside the region which offered a more promising selling price. “We will produce a law to regulate the region’s big mining companies to build power plants in our vicinity as part of their CSR” wrote Mr. Arifin in the letter. The mining giants would then be required to sell their electricity to the local PLN with a cut-off price, hence residents and industries alike could get a steady supply of electricity at a cheap price. The move was proven effective as several big names readily committed themselves to the power plants development.
During a seminar on coal exploitation in Jakarta on 13 September 2008, the Executive Director of APBI, Supriatna Suhala stated that mine-mouth power plants should be seen as a prioritized matter. He said that Kalimantan as the country’s energy powerhouse should be developed not only into primary energy provider area, but also into secondary energy provider area which could acquire a steady, cheap electricity.
This is based on Kalimantan’s coal reserve, accounted at 53 percent of the total national reserve. The island contributed a total of 91 percent of the national coal production in 2007, 52.3 percent of which was obtained from East Kalimantan and 35.7 percent from South Kalimantan. “Investment climate there should be more competitive than other regions, among other through the supply of cheap electricity,” said Mr. Suhala.
M.S. Marpaung, Director of Technique and Environment at the ESDM Ministry astoundingly provided some figures which show that coal from four provinces in Kalimantan had supported a steady electricity supply for at least a fifth of the world’s territory. Millions of tons of coal were shipped to world’s regions as far as China, India, Malaysia, Hongkong, Japan and Korea. All the while, the island’s residents should consent for a very inadequate electricity supply.
“It is wrong if we do not concentrate on (the development of) new power plants in Kalimantan,” said Mr. Marpaung to our reporters, early September. He further said that the current injustice should be put to an end, once and for all. Kalimantan should be made into a coal powerhouse, not only to fulfil the current needs of steady electricity supply, but also for the needs of the nation’s generations to come, he was further quoted as saying.
The Governor of Central Kalimantan, A. Teras Narang, was enthusiastic when he presented his ideas during a seminar in Jakarta on Saturday, 13 September 2008. He was accompanied in the seminar by Wahyudin Sitompul, an official at the local State Electricity Company (PLN in its Indonesian abbreviation). The two gentlemen were in a same mission; they came up to the country’s capital to unleash a mega-project on the interconnection for Java - Kalimantan power transfer.
Both confessed to a satisfaction over their presentations in front of the country’s high-level officials. To this end, Mr. Narang along with three other provincial leaders in Kalimantan had splashed a large amount of cash to organize the seminar. Hundreds of participants, most of them of regional bureaucrats, swarmed the Sultan hotel at the center of the country’s capital to be in attendance in the seminar’s discussions.
Mr. Narang took the chance to offer his vision as a regional leader in a speech during the seminar. He mentioned that the abundance of low calorie coal should primarily be devoted to the country’s energy requirements, instead of to the international market. He also pleaded that all stakeholders keep in mind that coal is a non-renewable energy resource. Its ultimate use should fully be aimed to support the country’s development programs.
In an interview with Majalah TAMBANG, Mr. Narang said that the development of mine-mouth power plants is highly viable. He based his statement on a local PLN’s finding which reveals that a per KwH energy would be very much cheaper if a power plants are built next to the coalmines. He laid out the fact that while unrelentingly complaining on providing too high a subsidy to stabilize the national energy price, the central government has been giving too little attention to energy at the mine-mouth proposals.
“Just develop as much mine-mouth power plants as possible. However big the demand from Java is, (they would be prepared) to provide,” he said. He challenged the central PLN’s lasting argument that an energy transmission line to Java is more expensive than inter-islands coal shipping costs. He readily offered a more likely calculation, backed with the unreliable weather situation at the Java sea recently that has proven to be the hindrance to smooth inter-island shippings.
He added that with the most recent technology advances, the energy supply from mine-mouth power plants is very much on the cards. There now remains only the classic issue of whether the government would be willing to consider the new option or to keep the inefficient, extravagant- ongoing practices.
“Central Kalimantan is ready for mine-mouth power plants,” Mr. Narang said in the seminar. To the participants, he explained that there are several spots throughout the province to be chosen as potential energy suppliers for Java island. The province’s Kota Waringin and Kapuas regencies, for instance, are only 310 and 315 kilometres away to Semarang, Central Java and Surabaya, East Java, respectively. This would mean in the perspective of a distance, an interconnection for Java-Kalimantan power transfer is indeed workable.
It is estimated that a Kalimantan - Java mine-mouth power plant interconnection would require a mere 2.3 billion rupiahs, with a break-even point already predicted right after the initial year.
As a conclusion to his speech, Mr. Narang invited all stakeholders to contemplate on the nation’s long-term strategic interests, of 10 to 20 years ahead. “Central Kalimantan is ready to seriously strive for our great nation’s gain. It’s now down to the central (government) to show the same determination,” said the Governor.
The Oddity in the 10.000 MW Energy Project
Meanwhile, a harsh viewpoint was expressed by former South Sumatera Governor, Syahrial Oesman. He pointed to the country’s power policy inconsistency. “South Sumatra was once appointed as the nation’s energy powerhouse. However, the 10.000 MW energy project is to be kicked off in Java,” he said in front of participants at the Association of Indonesian Mining Professionals (PERHAPI) annual gathering in the Horison Hotel in Palembang, South Sumatera on Friday, 25 July 2008.
He mentioned that there is an oddity in the project set off by the VP Jusuf Kalla. Elsewhere in the world, power plants are built at energy sources’ vicinity rather than of the users. South Sumatera is geared-up for a 7,000 MW electricity supply in the initial Sumatera - Java interconnection. Moreover, the province is blessed with the abundance of low-calorie coal, the power plant’s main element, beside of ore and sulphur reserves.
Mine-mouth power plants at the province are already planned the regencies of Banjar Sari (2 x 100 MW), Banko Tengah (4 x 600 MW), Adimas Baturaja Cemerlang (2 x 100 MW), MUBA (2 x 100 MW), MURA (2 x 100 MW), Musi Prima Coal (2 x 100 MW), Sungai Malam (2 x 600 MW and 3 x 100 MW), Muara Enim (4 x 100 MW), Gunung Megang (2 x 100 MW), and Lahat (4 x 600 MW).
“The permit (to commence the development) was never given,” said Mr. Oesman, who stated that all proceedings were already initiated as early as 2005. “All of a sudden, then came the policy to develop (the project) in Java,” revealed the gentleman who lost his incumbency as the province’s Governor last month.
Mr. Oesman asserted that the 10.000 MW project would be much cheaper if developed in South Sumatra. “Coal delivery expenses from Kalimantan to Java in two years time would be enough to develop a Sumatra - Java transmission line,” he said before put out the estimated cost in the region of 1.5 billion rupiahs.
He also stated that in a year the Java sea would only be navigable for a maximum three-month. Earlier this year, operations at Tanjung Jati B power plant at Cilacap, Central Java were halted due to delayed coal delivery thanks to hostile seawater.
The Pursuit of a Grand Scenario
Similar to Mr. Oesman, Jeffrey Mulyono, Chairman of the Indonesian Coal Mining Association (APBI in its Indonesian abbreviation) were downbeat when confessing that on several occasions, he sneered at the PLN for constantly putting sub-standard bargains on the electricity price in previous Java - Sumatera interconnection negotiations. He felt sorry that until now an inter-island transmission line in the country is still lacking.
“To me, it is as if the PLN prefers to continuously burn out diesel fuel,” he said in an interview with Majalah TAMBANG on 18 September 2008, in reference to the state electricity company’s reluctance to immediately consider the option. “If mine-mouth power plant is already at hand now, we can develop (the transmission line) anytime,” added Mr. Mulyono, who also stated that obstacles to the development should not end all initiatives.
He envisioned that the development of mine-mouth power plants in Kalimantan island should be integrated in an industrial areas development scheme. A grand scenario of mine-mouth power plants development, followed by the launching of nearby industrial areas would enhance economy and business growth in the region. This would create a vast job opportunity for the country’s workforce. A train line expansion in the island would also call for a huge need of electricity apart of the demand from the surrounding areas.
Mr. Mulyono praised some mining companies who already instigated their mine-mouth power plants development, such as of PT Adaro Indonesia and Indominco, as well as of Gorontalo and PT Berau Coal, whose small-scale mine-mouth power plants are designed for their own electricity demands. “I’d like to reiterate that mine-mouth power plant is really positive,” added Mr. Mulyono, “If the utilization is broadened, the multipying effect would be overwhelming”.
The Misfortune at Energy Powerhouses
The demand for mine-mouth power plants has increasingly become apparent. Syahrial Oesman is not the only regional leader whose inquiry for energy sources at mine-mouth was rejected by the central government.
As revealed in this magazine’s March 2008 edition, South Kalimantan Governor Rudy Arifin sent a letter to the Minister of Energy and Mineral Resources (ESDM in its Indonesian abbreviation), with copies to the President, the Vice President and the Chairman of the parliament’s Seventh Commission.
The February 2008 letter slammed the then energy crisis at South and Central Kalimantan provinces, which came along after a curtail policy was imposed on the region’s coal. Electricity for residential and industrial purposes was unsteady at best, threatening the regions’ conducive climate for investment. This happened amid both provinces’ claim as the country’s top coal producers.
Of the operational plants in the region, the provinces’ had to do with only 260 MW electricity. Coal producers there preferred to offload their products to markets outside the region which offered a more promising selling price. “We will produce a law to regulate the region’s big mining companies to build power plants in our vicinity as part of their CSR” wrote Mr. Arifin in the letter. The mining giants would then be required to sell their electricity to the local PLN with a cut-off price, hence residents and industries alike could get a steady supply of electricity at a cheap price. The move was proven effective as several big names readily committed themselves to the power plants development.
During a seminar on coal exploitation in Jakarta on 13 September 2008, the Executive Director of APBI, Supriatna Suhala stated that mine-mouth power plants should be seen as a prioritized matter. He said that Kalimantan as the country’s energy powerhouse should be developed not only into primary energy provider area, but also into secondary energy provider area which could acquire a steady, cheap electricity.
This is based on Kalimantan’s coal reserve, accounted at 53 percent of the total national reserve. The island contributed a total of 91 percent of the national coal production in 2007, 52.3 percent of which was obtained from East Kalimantan and 35.7 percent from South Kalimantan. “Investment climate there should be more competitive than other regions, among other through the supply of cheap electricity,” said Mr. Suhala.
M.S. Marpaung, Director of Technique and Environment at the ESDM Ministry astoundingly provided some figures which show that coal from four provinces in Kalimantan had supported a steady electricity supply for at least a fifth of the world’s territory. Millions of tons of coal were shipped to world’s regions as far as China, India, Malaysia, Hongkong, Japan and Korea. All the while, the island’s residents should consent for a very inadequate electricity supply.
“It is wrong if we do not concentrate on (the development of) new power plants in Kalimantan,” said Mr. Marpaung to our reporters, early September. He further said that the current injustice should be put to an end, once and for all. Kalimantan should be made into a coal powerhouse, not only to fulfil the current needs of steady electricity supply, but also for the needs of the nation’s generations to come, he was further quoted as saying.
Mining Sector Far From Collapsing
The mining sector is believed to be able to successfully ride out the current economy crisis. The crisis could eventually be conditioned to bring further opportunities. Only professional mining would endure the hardships.
“The mining sector, of coal in particular, is far from collapsing. We even foresee lots of opportunities here,” said Jeffrey Mulyono optimistically. The gentleman who is the chairman of Indonesian Coal Mining Association (APBI in its Indonesian abbreviation) was among the speakers in an international seminar on the impacts of the global crisis to the national mining industry, organized by Majalah TAMBANG in Jakarta on 3 December 2008.
Investment in the coal mining sector is at present most prospective. In his opinion, only mining companies who run their business professionally would succeed in creating and catching the opportunities. He also warned, however, that companies should spend more wisely in the current unpredictable condition.
The current crisis, according to Mr. Mulyono, would be a natural selection for illegal miners alike. Prices of commodities would be easily exposed to corrections, therefore illegal mining practitioners would not survive and they would automatically be perished. He then raised the issues of strengthening the sector’s human resources and promoting of locally made products.
Another optimistic view was voiced out by Krishna Syarif, Financial Director of PT. Timah, Tbk., the world’s second largest tin producer after China’s Yunan Tin. He explained that even in the current economic situation, PT. Timah had secured its profit significantly. With the current international price at US$ 11,500 per ton, his company could roll its business healthily. “At the current exchange rate to the US dollar, our production costs are close to our expectation,” said the young executive, sharing his inspiring story to the seminar’s audience.
Mr. Syarif also noted that companies should always pay attention to consolidation efforts with national and local governments, as well as other stakeholders, in order to maintain a good control on production and export. He also raised up the issues of good mining practice to ensure effectivity and efficiency in the mining activities, as well as of efforts to eradicate illegal mining conducts.
He reminded the audience that the crisis will eventually come to an end. “Tin is a very prospective commodity, as it is much needed by strategic industries such as the electronic industry. I am sure of an improved global price of this commodity in the future,” said Mr. Syarif further, concluding his speech.
Another speaker of the seminar, Rudy Merukh of Merukh Enterprise, was also in an extra optimistic mood when explaining that the mining sector is fundamentally strong. He said that the sector would easily be able to ride out the current crisis.
The man who is also a director at PT Newmont Nusa Tenggara then shared his company’s success story, starting with its 35 years experience weathering the ups and downs in the mining business. In 1982, when gold’s price at the global market fell down, his company, currently owner of up to 500 mining concessions all over the country, included the trading of gold as a future commodity in futures markets in the UK and Australia.
Mr. Merukh stated that there is more to do than only concentrating on financing to overcome the impacts of the crisis. Other aspects to be put into consideration are cost, marketing and sales. For instance, added value should be boosted in terms of marketing.
“The mining sector, of coal in particular, is far from collapsing. We even foresee lots of opportunities here,” said Jeffrey Mulyono optimistically. The gentleman who is the chairman of Indonesian Coal Mining Association (APBI in its Indonesian abbreviation) was among the speakers in an international seminar on the impacts of the global crisis to the national mining industry, organized by Majalah TAMBANG in Jakarta on 3 December 2008.
Investment in the coal mining sector is at present most prospective. In his opinion, only mining companies who run their business professionally would succeed in creating and catching the opportunities. He also warned, however, that companies should spend more wisely in the current unpredictable condition.
The current crisis, according to Mr. Mulyono, would be a natural selection for illegal miners alike. Prices of commodities would be easily exposed to corrections, therefore illegal mining practitioners would not survive and they would automatically be perished. He then raised the issues of strengthening the sector’s human resources and promoting of locally made products.
Another optimistic view was voiced out by Krishna Syarif, Financial Director of PT. Timah, Tbk., the world’s second largest tin producer after China’s Yunan Tin. He explained that even in the current economic situation, PT. Timah had secured its profit significantly. With the current international price at US$ 11,500 per ton, his company could roll its business healthily. “At the current exchange rate to the US dollar, our production costs are close to our expectation,” said the young executive, sharing his inspiring story to the seminar’s audience.
Mr. Syarif also noted that companies should always pay attention to consolidation efforts with national and local governments, as well as other stakeholders, in order to maintain a good control on production and export. He also raised up the issues of good mining practice to ensure effectivity and efficiency in the mining activities, as well as of efforts to eradicate illegal mining conducts.
He reminded the audience that the crisis will eventually come to an end. “Tin is a very prospective commodity, as it is much needed by strategic industries such as the electronic industry. I am sure of an improved global price of this commodity in the future,” said Mr. Syarif further, concluding his speech.
Another speaker of the seminar, Rudy Merukh of Merukh Enterprise, was also in an extra optimistic mood when explaining that the mining sector is fundamentally strong. He said that the sector would easily be able to ride out the current crisis.
The man who is also a director at PT Newmont Nusa Tenggara then shared his company’s success story, starting with its 35 years experience weathering the ups and downs in the mining business. In 1982, when gold’s price at the global market fell down, his company, currently owner of up to 500 mining concessions all over the country, included the trading of gold as a future commodity in futures markets in the UK and Australia.
Mr. Merukh stated that there is more to do than only concentrating on financing to overcome the impacts of the crisis. Other aspects to be put into consideration are cost, marketing and sales. For instance, added value should be boosted in terms of marketing.
Beware Of Mining Commodities Certificate Forgery!
The Ministry of Trade had issued a warning to mining stakeholders on the forgery of quality certificate of mining commodities. The offense is usually committed by fraudulent traders when presenting offers to potential buyers. It often occurs in export-import trading. As a result, buyers frequently receive goods that fail to match the quality declared in the document. This will consequently tarnish the image of the Indonesian mining as a whole.
The above was exclusively revealed to Majalah TAMBANG by the Director of Export of Industry and Mining Product, Directorate General of International Trade, H. Agus Tjahjono, in Jakarta early January 2009. Mr. Tjahjono’s office only recently had dealt with several cases of export quality certificate forgeries.
The offense was committed particularly by irresponsible traders. In most cases, potential buyers will ask the traders for information on goods and commodities. The traders will initially show a forged certificate. When the buyers are already convinced and therefore placing an order, the quality and the quantity of the delivered goods will not be the same as they are stated in the certificate. The certificates in question are no doubt faked, as their numbers are not registered at the Ministry.
Such is a common practice, especially for mining products. This is mainly due to the fact that traders could get the goods from so many sources. They would forge the certificate in expectation of a quick deal. For an example, there was a case of a delivery which stated as consisting of 6,100 calories coal. What is delivered to the buyer, however, would be of much lower quality than that stated in the correlated certificate.
Mr. Tjahjono also said that in such a case, surveyors who issued the Surveyor’s Report (the so-called LS) are not to blame, since the LS is not a quality and quantity credential for exported goods. Issuing an LS is just among the procedures to open an Export Notification (the so-called PEB), which is issued only when the exported goods are about to be shipped. The quality and quantity of the said products will refer to the quality certificate.
Indeed, surveyors have a hand in issuing quality certificates of exported goods. However, it is these certificates that are forged by irresponsible traders for their advantage. Not only they do harm to buyers of Indonesian products, they also do to the image of Indonesian mining, Mr. Tjahjono was further quoted as saying.
The national police is currently pursuing offenders of certificate forgery. The Trade Ministry assumed that such practice is already around for some times in the Indonesian mining business. The case is seldom exposed since there are very few complaints lodged by afflicted buyers.
The above was exclusively revealed to Majalah TAMBANG by the Director of Export of Industry and Mining Product, Directorate General of International Trade, H. Agus Tjahjono, in Jakarta early January 2009. Mr. Tjahjono’s office only recently had dealt with several cases of export quality certificate forgeries.
The offense was committed particularly by irresponsible traders. In most cases, potential buyers will ask the traders for information on goods and commodities. The traders will initially show a forged certificate. When the buyers are already convinced and therefore placing an order, the quality and the quantity of the delivered goods will not be the same as they are stated in the certificate. The certificates in question are no doubt faked, as their numbers are not registered at the Ministry.
Such is a common practice, especially for mining products. This is mainly due to the fact that traders could get the goods from so many sources. They would forge the certificate in expectation of a quick deal. For an example, there was a case of a delivery which stated as consisting of 6,100 calories coal. What is delivered to the buyer, however, would be of much lower quality than that stated in the correlated certificate.
Mr. Tjahjono also said that in such a case, surveyors who issued the Surveyor’s Report (the so-called LS) are not to blame, since the LS is not a quality and quantity credential for exported goods. Issuing an LS is just among the procedures to open an Export Notification (the so-called PEB), which is issued only when the exported goods are about to be shipped. The quality and quantity of the said products will refer to the quality certificate.
Indeed, surveyors have a hand in issuing quality certificates of exported goods. However, it is these certificates that are forged by irresponsible traders for their advantage. Not only they do harm to buyers of Indonesian products, they also do to the image of Indonesian mining, Mr. Tjahjono was further quoted as saying.
The national police is currently pursuing offenders of certificate forgery. The Trade Ministry assumed that such practice is already around for some times in the Indonesian mining business. The case is seldom exposed since there are very few complaints lodged by afflicted buyers.
Lahai Coal’s Commitment To Society Empowerment
PT. Lahai Coal, a Central Kalimantan-based subsidiary company of BHP Billiton engaged in coal mining, is committed to society empowerment in its mining area. The company has initiated community-based activities, even when its current mining operation is still at explorative stage.
“We are working hard so as to bring the benefit to the local society and economy through our investment programs in the development of social-economy, education, basic infrastructure, health and sanitation sectors,” explained Bob Kurniawan, the company’s Superintendent for Public Relation and Development to Majalah TAMBANG.
Among the community development programs his company has been involved in since year 2005 is the establishment of 42 self-reliance groups in the villages across its mining area at Central Kalimantan’s Murung Raya regency. The groups’ types of activities are varied, from basic groceries supply to credit and saving service.
The company has also actively involved in the local education sector. Since 2005, it has spent as much as 742 million rupiahs through scolarship programs for approximately 550 students, from elementary to university level. It is also in cooperation with The Sampoerna Foundation in a training program for teachers and principals of the region’s elementary schools. In the health sector it initiated programs on medical and healthcare services.
The company had also invested in the region’s clean water infratructure, in the one which is built at Pande Siron village. The installation had provided clean water for the region’s surrounding villages. “We want to firstly give in as much as possible for the benefit of the local society, before we start gaining profit from our operations here,” concluded Mr. Kurniawan to our reporter.
“We are working hard so as to bring the benefit to the local society and economy through our investment programs in the development of social-economy, education, basic infrastructure, health and sanitation sectors,” explained Bob Kurniawan, the company’s Superintendent for Public Relation and Development to Majalah TAMBANG.
Among the community development programs his company has been involved in since year 2005 is the establishment of 42 self-reliance groups in the villages across its mining area at Central Kalimantan’s Murung Raya regency. The groups’ types of activities are varied, from basic groceries supply to credit and saving service.
The company has also actively involved in the local education sector. Since 2005, it has spent as much as 742 million rupiahs through scolarship programs for approximately 550 students, from elementary to university level. It is also in cooperation with The Sampoerna Foundation in a training program for teachers and principals of the region’s elementary schools. In the health sector it initiated programs on medical and healthcare services.
The company had also invested in the region’s clean water infratructure, in the one which is built at Pande Siron village. The installation had provided clean water for the region’s surrounding villages. “We want to firstly give in as much as possible for the benefit of the local society, before we start gaining profit from our operations here,” concluded Mr. Kurniawan to our reporter.
Adaro’s Coal Production Raised By 7%
PT Adaro Energy, Tbk has announced a surplus of its coal production target. By the end of 2008, the company has produce 38,482 million tons of coal. It was a 7% surplus of the 38,124 million tons target, estimated by the company that was recently categorized as 45 LQ by the Indonesian Stock Exchange (IDX) authority.
The Indonesian second largest coal producer also accounted 41.1 million tons of sales, a 9% growth from last year record.
Boy Garibaldi Thohir, the president director of PT Adaro Energy, expressed his satisfaction of this achievement last Wednesday, on 4 February 2009. “Despite the problems and challenges that we must cope with, we are pleased with the result of our production and sales in 2008,” he said. According to Thohir, the increasing sales and production record was due to the stable demand of coal.
Specifically in the fourth quarter of 2008, the company has also gain success of producing 9.8 million tons and selling 10.2 million tons of coal. As a matter of fact, earlier in the year, the company had to face problems of bad weathers and low amount of stockpile.
In dealing with the current economic crisis, the company has been very careful in managing their cash flow. Additionally, they were committed in doing research on long-term growth strategy, by sustaining the previously set targets. The company listed as ADRO in the stock exchange is still in a viable financial structure, and tend to get even better.
The Indonesian second largest coal producer also accounted 41.1 million tons of sales, a 9% growth from last year record.
Boy Garibaldi Thohir, the president director of PT Adaro Energy, expressed his satisfaction of this achievement last Wednesday, on 4 February 2009. “Despite the problems and challenges that we must cope with, we are pleased with the result of our production and sales in 2008,” he said. According to Thohir, the increasing sales and production record was due to the stable demand of coal.
Specifically in the fourth quarter of 2008, the company has also gain success of producing 9.8 million tons and selling 10.2 million tons of coal. As a matter of fact, earlier in the year, the company had to face problems of bad weathers and low amount of stockpile.
In dealing with the current economic crisis, the company has been very careful in managing their cash flow. Additionally, they were committed in doing research on long-term growth strategy, by sustaining the previously set targets. The company listed as ADRO in the stock exchange is still in a viable financial structure, and tend to get even better.
Bukit Asam Prepares 5 Railways Constructions
PT Tambang Batubara Bukit Asam, Tbk (PTBA), one of Indonesia’s largest coal miners, has committed to support national electricity projects. However, the projects have often been impeded by the inadequate transportation infrastructure from mining sites to coal terminals. Therefore, Bukit Asam has prepared the construction of 5 railways in Sumatera to transport 130 million tons of coal per year.
Milawarman, Operational Director of PTBA, revealed the plan during his presentation on the second day of Association of Indonesian Mining Professionals (PERHAPI in its Indonesian acronym) Conference & Workshop 2009 entitled “Save Indonesian Coal”. The event was held on 18-20 March 2009, at Hotel Gran Melia Jakarta.
PTBA has estimated a coal production of 225 million tons for the year 2009, of which 75 million tons would be allocated for domestic demand and 150 million tons for export market. The domestic allocation would be utilized to support the national electricity project, i.e. to supply the needs of coal-fired power plants, which required 61.7 million tons of coal per year.
“Nevertheless, the distribution of a large amount of coal for electricity projects have been impeded by the inadequate transportation infrastructure,” Milawarman explained. Hence, since early 2009, PTBA has prepared 5 railways constructions to transport 130 million tons of coal per year.
The 5 railways constructions currently being prepared are upgrading the existing Tanjung Enim-Lampung railway (20 million tons/year of capacity); building another line of Tanjung Enim-Lampung railway (20 million tons/year of capacity); building the Tanjung Enim-Tanjung Api-Api railway (50 million tons/year of capacity); building the Tanjung Enim-Bengkulu Pulau Baai (20 million tons/year of capacity); and building the Tanjung Enim-Bengkulu Limau (20 million tons/year of capacity).
Additionally, PTBA also planned to build 5 mine mouth power plants, located in Bangko Tengah – South Sumatera (4x600 MW), Banjarsari – South Sumatera (2x100 MW), Tanjung Enim – South Sumatera (3x10 MW), Peranap – Riau (2x10 MW), and Tarahan – Lampung (2x8 MW).
Milawarman, Operational Director of PTBA, revealed the plan during his presentation on the second day of Association of Indonesian Mining Professionals (PERHAPI in its Indonesian acronym) Conference & Workshop 2009 entitled “Save Indonesian Coal”. The event was held on 18-20 March 2009, at Hotel Gran Melia Jakarta.
PTBA has estimated a coal production of 225 million tons for the year 2009, of which 75 million tons would be allocated for domestic demand and 150 million tons for export market. The domestic allocation would be utilized to support the national electricity project, i.e. to supply the needs of coal-fired power plants, which required 61.7 million tons of coal per year.
“Nevertheless, the distribution of a large amount of coal for electricity projects have been impeded by the inadequate transportation infrastructure,” Milawarman explained. Hence, since early 2009, PTBA has prepared 5 railways constructions to transport 130 million tons of coal per year.
The 5 railways constructions currently being prepared are upgrading the existing Tanjung Enim-Lampung railway (20 million tons/year of capacity); building another line of Tanjung Enim-Lampung railway (20 million tons/year of capacity); building the Tanjung Enim-Tanjung Api-Api railway (50 million tons/year of capacity); building the Tanjung Enim-Bengkulu Pulau Baai (20 million tons/year of capacity); and building the Tanjung Enim-Bengkulu Limau (20 million tons/year of capacity).
Additionally, PTBA also planned to build 5 mine mouth power plants, located in Bangko Tengah – South Sumatera (4x600 MW), Banjarsari – South Sumatera (2x100 MW), Tanjung Enim – South Sumatera (3x10 MW), Peranap – Riau (2x10 MW), and Tarahan – Lampung (2x8 MW).
Coal Association Called To Control Miners
The Indonesian Coal Mining Association (ICMA) is called to expand its membership further in view of controlling the conduct of miners in the national coal sector. This was stated by Mr. Bambang Setiawan, Director General for Mineral, Coal and Geothermal from the Ministry for Energy and Mineral Resources, in a speech during an inaugural ceremony of the newly elected Chairman of ICMA for the period of 2009 - 2013, Mr. Bob Kamandanu, in Jakarta, on 1 April 2009.
ICMA should presently embrace all levels of coal miners in the industry in its membership to ensure that the conduct of miners be conformed to existing laws and regulations, in order to create a more conducive climate for investment and business, Mr. Setiawan was quoted as saying.
After the new mining law No. 4 of 2009 entered into force, a transition from a mining authorization regime into a mining permit one has become obligatory in the national mining sector. The association’s role to ensure that all miners be in compliance to the directive is highly anticipated. State income from the permit regime has by far prevail over that from the previously applied contract regime.
In his speech, the newly elected ICMA Chairman admitted that the membership of the association has up to recently been only comprised of big names in the coal mining sector. He expected that in the future it would also contain thousands of small and medium scale enterprises doing business in the country’s coal mining sector. Mr. Kamandanu also stated that during his chairmanship, he would continue to strive on with developing the positive image of mining in Indonesia.
He would also push for good mining practices, environmental protection and promotion of CSR.
The functionaries of ICMa for the period of 2009 – 2013:
Chairman: Bob Kamandanu
Executive Director: Supriatna Suhala
Treasurer: H.Kirtiadi
Deputy for Organization & Good Mining Practice: Irawan Indrarta Poerwo
Deputy for CSR and Environment: Tri Harjono
Deputy for Coal Technology & Investment Opportunity: Kaz Tanaka
Deputy for Regulations and Legal Authorizations: Abdul Latief Baky
Deputy for Governmental Relations: Herman Kasih
Deputy for International Relations & Commercial: Andre Mamuaya
Deputy for Public Relations: Herman Heru Suprobo
ICMA should presently embrace all levels of coal miners in the industry in its membership to ensure that the conduct of miners be conformed to existing laws and regulations, in order to create a more conducive climate for investment and business, Mr. Setiawan was quoted as saying.
After the new mining law No. 4 of 2009 entered into force, a transition from a mining authorization regime into a mining permit one has become obligatory in the national mining sector. The association’s role to ensure that all miners be in compliance to the directive is highly anticipated. State income from the permit regime has by far prevail over that from the previously applied contract regime.
In his speech, the newly elected ICMA Chairman admitted that the membership of the association has up to recently been only comprised of big names in the coal mining sector. He expected that in the future it would also contain thousands of small and medium scale enterprises doing business in the country’s coal mining sector. Mr. Kamandanu also stated that during his chairmanship, he would continue to strive on with developing the positive image of mining in Indonesia.
He would also push for good mining practices, environmental protection and promotion of CSR.
The functionaries of ICMa for the period of 2009 – 2013:
Chairman: Bob Kamandanu
Executive Director: Supriatna Suhala
Treasurer: H.Kirtiadi
Deputy for Organization & Good Mining Practice: Irawan Indrarta Poerwo
Deputy for CSR and Environment: Tri Harjono
Deputy for Coal Technology & Investment Opportunity: Kaz Tanaka
Deputy for Regulations and Legal Authorizations: Abdul Latief Baky
Deputy for Governmental Relations: Herman Kasih
Deputy for International Relations & Commercial: Andre Mamuaya
Deputy for Public Relations: Herman Heru Suprobo
Indonesia's Coal Export Drop 4 MT
During the first half of 2009, Indonesia's coal export realization was estimated to be 4 MT lower than the same period last year. The above was mentioned by Bob Kamandanu, the Chairman of Indonesian Coal Mining Association (ICMA), during a blood drive event in the Ministry of Energy and Mineral Resources Office, on 19 August 2009.
Kamandanu claimed that the decline has nothing to do with the performance of coal mining sector. Indonesia's coal export decline was driven mostly by the impact of global crisis, which has weakened the demand for coal by importers in the last six month. Nevertheless, he expected that the export volume would increase until the year end, following the stronger market demand.
"The export value decline was due to the crisis that caused them (buyers) to use their right to cut 10% of the export quota set in the contract. Later on, they could pick it up again," he said.
"Usually, buyers are given with the privilege to reduce up to 10% of the purchase stated in the contract," Kamandanu further explained.
Although the export quota was declining, the domestic consumption of coal has increased 5 MT during the same period. It would mean that the overall sales of coal have indicated a positive progress, indeed.
Kamandanu also estimated that the total sum of exports and domestic sales could reach 260 MT by the end of this year.
Kamandanu claimed that the decline has nothing to do with the performance of coal mining sector. Indonesia's coal export decline was driven mostly by the impact of global crisis, which has weakened the demand for coal by importers in the last six month. Nevertheless, he expected that the export volume would increase until the year end, following the stronger market demand.
"The export value decline was due to the crisis that caused them (buyers) to use their right to cut 10% of the export quota set in the contract. Later on, they could pick it up again," he said.
"Usually, buyers are given with the privilege to reduce up to 10% of the purchase stated in the contract," Kamandanu further explained.
Although the export quota was declining, the domestic consumption of coal has increased 5 MT during the same period. It would mean that the overall sales of coal have indicated a positive progress, indeed.
Kamandanu also estimated that the total sum of exports and domestic sales could reach 260 MT by the end of this year.
Arutmin To Provide 10 MT Of Coal For 10,000 MW Project
PT Arutmin Indonesia has recently been increasing its production capacity, and preparing for 3 new coal ports. Faisal Firdaus, CEO of Arutmin, said that the efforts were to support the coal supplies for the Phase I of 10,000 MW Electricity Generation Program.
"We will increase production up to 30 MT per year, and one third of the amount is allocated to supply coal for the 10,000 MW project. For the shipping, we are building 3 new coal ports. One of the ports is now ready," Firdaus told TAMBANG Magazine, on 19 August 2009.
Under the license of Coal Mining Contract of Work Generation I (1981), PT Arutmin Indonesia has conducted coal exploitation on 5 different working areas in South Kalimantan, i.e. Senakin and North Pulau Laut Coal Terminal (Kota Baru), Satui and Batu Licin (Tanah Bumbu), and also Asam-Asam (Tanah Laut).
Additionally, Arutmin has been working on expansion programs for 3 new coal ports. Two of the ports are located in Kimpat (Tanah Laut) and Satui (Tanah Bumbu). The other one, located in Asam-Asam (Tanah Laut), has been completed and tested for trials. The 3 new coal ports were built to anticipate the production capacity increase.
Firdaus explained that currently the domestic market would not be able to tap the additional production from Arutmin, because the Phase I of 10,000 MW Project has been going in a very slow pace. "But, in a year or two, we have the commitment for that," he concluded.
"We will increase production up to 30 MT per year, and one third of the amount is allocated to supply coal for the 10,000 MW project. For the shipping, we are building 3 new coal ports. One of the ports is now ready," Firdaus told TAMBANG Magazine, on 19 August 2009.
Under the license of Coal Mining Contract of Work Generation I (1981), PT Arutmin Indonesia has conducted coal exploitation on 5 different working areas in South Kalimantan, i.e. Senakin and North Pulau Laut Coal Terminal (Kota Baru), Satui and Batu Licin (Tanah Bumbu), and also Asam-Asam (Tanah Laut).
Additionally, Arutmin has been working on expansion programs for 3 new coal ports. Two of the ports are located in Kimpat (Tanah Laut) and Satui (Tanah Bumbu). The other one, located in Asam-Asam (Tanah Laut), has been completed and tested for trials. The 3 new coal ports were built to anticipate the production capacity increase.
Firdaus explained that currently the domestic market would not be able to tap the additional production from Arutmin, because the Phase I of 10,000 MW Project has been going in a very slow pace. "But, in a year or two, we have the commitment for that," he concluded.
Bayan Starts Production At World's Largest Clean Coal Facility
PT Bayan Resources, Tbk. announced that their joint venture company PT Kaltim Supacoal (KSC) has started producing upgraded clean coal briquettes at KSC’s 1 million tons per annum Binderless Coal Briquetting plant (BCB Plant) in Tabang, Indonesia.
According to a press release, sent to Majalah TAMBANG on 25 August 2009, the commissioning process has been completed the day before. As scheduled, the plant operators ran all components of the BCB Plant under temporary conditions, from the raw coal feeder breaker, to the drying column, to multiple briquetting units, and finally to the product out-loading bin. With all process operated to specification, the BCB plant has successfully produced its first run of upgraded coal.
With the completion of the commissioning process, PT Kaltim Supacoal would now move to the next phase of operating the BCB plant under temporary power on a continuous 24 hours basis for a number of days.
The commissioning process has actually been conducted for the last couple of months, involving a simultaneous commissioning of the BCB Plant and a 10 MW coal-fired Power Station.
For the coal-fired power station, the commissioning process has almost completed. Final integration with the BCB Plant was expected to be ready in the next few weeks.
At that point, the coal upgrading facility would be able to run at enhanced levels allowing for ramp up to full production. Bayan was optimistic that the optimum production capacity could be reached over the next few months.
According to a press release, sent to Majalah TAMBANG on 25 August 2009, the commissioning process has been completed the day before. As scheduled, the plant operators ran all components of the BCB Plant under temporary conditions, from the raw coal feeder breaker, to the drying column, to multiple briquetting units, and finally to the product out-loading bin. With all process operated to specification, the BCB plant has successfully produced its first run of upgraded coal.
With the completion of the commissioning process, PT Kaltim Supacoal would now move to the next phase of operating the BCB plant under temporary power on a continuous 24 hours basis for a number of days.
The commissioning process has actually been conducted for the last couple of months, involving a simultaneous commissioning of the BCB Plant and a 10 MW coal-fired Power Station.
For the coal-fired power station, the commissioning process has almost completed. Final integration with the BCB Plant was expected to be ready in the next few weeks.
At that point, the coal upgrading facility would be able to run at enhanced levels allowing for ramp up to full production. Bayan was optimistic that the optimum production capacity could be reached over the next few months.
Gov’t Gives Incentives For Investment In Mineral And Coal Processing Industry
Jakarta – TAMBANG. To promote the growth of domestic mining products processing industry, the Indonesian government has promised to give incentives to investors. The enticements would include tax incentives, off-take agreement, bailout, and funding assistances.
The above was mentioned by Muhammad Lutfi, Head of Indonesia Investment Coordinating Board (BKPM in its Indonesian abbreviation), after giving a keynote speech for the Seminar & Workshop on “Opportunities and Challenges on Indonesia’s Mineral and Coal Added Value Oriented Industries”. The seminar and workshop were held by the Association of Indonesian Mining Proffesionals (PERHAPI in its Indonesian abbreviation), in Jakarta, 7 October 2009.
Luthfi said that Indonesia has a very good opportunity in developing the mining products processing industries. He explained that Japan, as the major importer of Indonesian metal products, has been working on the effort to reduce environmental pollution level that derives from industrial activities.
”But of course, the environmental pollution levels in Japan and in Indonesia are different,” he claimed. Therefore, when the metal industry activities in Japan has slow down, Indonesia could take over that role.
Nevertheless, the economical value would be insignificant if mining companies decided to build their own small-scale smelter. For iron ore, tin, nickel, or bauxite processing, it would take a long time to reach the break-even point. “Hence, it is necessary for the government to intervene,” he said.
The government must provide some enticements, such as tax incentives. It would reduce the risk for existing investors to move their smelters to Indonesia, and also for new investors who planned to build one in Indonesia. “The incentive would be in the form of tax allowance, or income tax reduction,” Luthfi told.
According to Luthfi, BKPM has been in a final negotiation process with one of the world’s leading iron company. The East Asian investor has committed to build a processing plant in Indonesia, if they were given the same incentive given in Vietnam.
“So, we are discussing the matter. Later on this afternoon, I will bring the subject to the Finance Minister,” he announced. The Finance Minister herself has provided the time, at least to offer new breaktrhough to tackle the problem.
Additionaly, the government would also give an off-take agreement to buy parts or whole product from the company. The agreement could be arranged for state-owned enterprises, such as those who build refinery industry. “The refinery products could be purchased by Pertamina,” he said.
Thirdly, the government also promised a bailout. It would be just like the state utility company’s (PLN) power plants that always require government bailout.
And last, the government would also provide funding assisstances. “We must call Bank Mandiri, BRI, and BNI (state-owned banking enterprises) to form a consortium for lead financing, so Indonesian companies could create added value for the country,” he claimed.
In this context, Lutfi continued, local bussiness players would of course be prioritized. The next in line would be national players, and then international players. “This priority might not be included in the Law, but it is a vision of the people in this nation to upheld sovereignty and to boost the growth of domestic bussiness players,” he concluded.
The above was mentioned by Muhammad Lutfi, Head of Indonesia Investment Coordinating Board (BKPM in its Indonesian abbreviation), after giving a keynote speech for the Seminar & Workshop on “Opportunities and Challenges on Indonesia’s Mineral and Coal Added Value Oriented Industries”. The seminar and workshop were held by the Association of Indonesian Mining Proffesionals (PERHAPI in its Indonesian abbreviation), in Jakarta, 7 October 2009.
Luthfi said that Indonesia has a very good opportunity in developing the mining products processing industries. He explained that Japan, as the major importer of Indonesian metal products, has been working on the effort to reduce environmental pollution level that derives from industrial activities.
”But of course, the environmental pollution levels in Japan and in Indonesia are different,” he claimed. Therefore, when the metal industry activities in Japan has slow down, Indonesia could take over that role.
Nevertheless, the economical value would be insignificant if mining companies decided to build their own small-scale smelter. For iron ore, tin, nickel, or bauxite processing, it would take a long time to reach the break-even point. “Hence, it is necessary for the government to intervene,” he said.
The government must provide some enticements, such as tax incentives. It would reduce the risk for existing investors to move their smelters to Indonesia, and also for new investors who planned to build one in Indonesia. “The incentive would be in the form of tax allowance, or income tax reduction,” Luthfi told.
According to Luthfi, BKPM has been in a final negotiation process with one of the world’s leading iron company. The East Asian investor has committed to build a processing plant in Indonesia, if they were given the same incentive given in Vietnam.
“So, we are discussing the matter. Later on this afternoon, I will bring the subject to the Finance Minister,” he announced. The Finance Minister herself has provided the time, at least to offer new breaktrhough to tackle the problem.
Additionaly, the government would also give an off-take agreement to buy parts or whole product from the company. The agreement could be arranged for state-owned enterprises, such as those who build refinery industry. “The refinery products could be purchased by Pertamina,” he said.
Thirdly, the government also promised a bailout. It would be just like the state utility company’s (PLN) power plants that always require government bailout.
And last, the government would also provide funding assisstances. “We must call Bank Mandiri, BRI, and BNI (state-owned banking enterprises) to form a consortium for lead financing, so Indonesian companies could create added value for the country,” he claimed.
In this context, Lutfi continued, local bussiness players would of course be prioritized. The next in line would be national players, and then international players. “This priority might not be included in the Law, but it is a vision of the people in this nation to upheld sovereignty and to boost the growth of domestic bussiness players,” he concluded.
Darwin Saleh Officially Takes Office In The Department Of ESDM
Jakarta – TAMBANG. A few hours after inaugurated by President Susilo Bambang Yudhoyono, Darwin Zahedy Saleh took office at the Department of Energy and Mineral Resources (ESDM in its Indonesian abbreviation). The new Minister of ESDM was welcomed in a ceremony held on Thursday afternoon, 22 October 2009. He delivered his first speech as the Minister of ESDM in the ceremony, without using a script.
“Allow me to use no script, to make it relax,” Darwin Saleh addressed the audience. Previously at the ceremony, Purnomo Yusgiantoro handed over the documents of Department of ESDM to Darwin Saleh, to mark the replacement.
Saleh admitted that challenges lie ahead of him, as a leader in the energy and mineral resources sector. “When I was assigned here, I made a sincere promise deep in my heart, that with the help of God and all of you, Ladies and Gentlemen, I will fulfill my duty for the nation,” he spoke in front of hundreds of staffs and stakeholders at the Department of ESDM.
The challenges include the contribution from energy and mineral resources for the state income, which accounted for more than 35%. Other challenges are to contribute to the foreign exchange reserve, to create job and its multiplier effect, to supply raw material for the industry, to supply energy, and so on.
“Further challenges would be on how we can convert it into competitive advantage,” he said.
Saleh claimed that he was optimistic for the future, with the support from the previous Minister, staffs, and stakeholders at the ESDM sector.
“I am convinced that with a goodwill, firmness, and transparency, we can deal with all challenges, solve all problems, and accelerate for what we have been waiting for,” Darwin Saleh committed.
After the ceremony, Darwin Saleh who was accompanied by his wife, Destiana Gianawati, went ahead to his office on the second floor of the Department of ESDM Main Building. As scheduled, he would have to attend a coordination meeting with the executives and directors at the Department of ESDM.
“Allow me to use no script, to make it relax,” Darwin Saleh addressed the audience. Previously at the ceremony, Purnomo Yusgiantoro handed over the documents of Department of ESDM to Darwin Saleh, to mark the replacement.
Saleh admitted that challenges lie ahead of him, as a leader in the energy and mineral resources sector. “When I was assigned here, I made a sincere promise deep in my heart, that with the help of God and all of you, Ladies and Gentlemen, I will fulfill my duty for the nation,” he spoke in front of hundreds of staffs and stakeholders at the Department of ESDM.
The challenges include the contribution from energy and mineral resources for the state income, which accounted for more than 35%. Other challenges are to contribute to the foreign exchange reserve, to create job and its multiplier effect, to supply raw material for the industry, to supply energy, and so on.
“Further challenges would be on how we can convert it into competitive advantage,” he said.
Saleh claimed that he was optimistic for the future, with the support from the previous Minister, staffs, and stakeholders at the ESDM sector.
“I am convinced that with a goodwill, firmness, and transparency, we can deal with all challenges, solve all problems, and accelerate for what we have been waiting for,” Darwin Saleh committed.
After the ceremony, Darwin Saleh who was accompanied by his wife, Destiana Gianawati, went ahead to his office on the second floor of the Department of ESDM Main Building. As scheduled, he would have to attend a coordination meeting with the executives and directors at the Department of ESDM.
What is Coal?
Coal is a fossil fuel and is the altered remains of prehistoric vegetation that originally accumulated in swamps and peat bogs.
The energy we get from coal today comes from the energy that plants absorbed from the sun millions of years ago. All living plants store solar energy through a process known as photosynthesis. When plants die, this energy is usually released as the plants decay. Under conditions favourable to coal formation, the decaying process is interrupted, preventing the release of the stored solar energy. The energy is locked into the coal.
Coal formation began during the Carboniferous Period - known as the first coal age - which spanned 360 million to 290 million years ago. The build-up of silt and other sediments, together with movements in the earth's crust - known as tectonic movements - buried swamps and peat bogs, often to great depths. With burial, the plant material was subjected to high temperatures and pressures. This caused physical and chemical changes in the vegetation, transforming it into peat and then into coal.
The energy we get from coal today comes from the energy that plants absorbed from the sun millions of years ago. All living plants store solar energy through a process known as photosynthesis. When plants die, this energy is usually released as the plants decay. Under conditions favourable to coal formation, the decaying process is interrupted, preventing the release of the stored solar energy. The energy is locked into the coal.
Coal formation began during the Carboniferous Period - known as the first coal age - which spanned 360 million to 290 million years ago. The build-up of silt and other sediments, together with movements in the earth's crust - known as tectonic movements - buried swamps and peat bogs, often to great depths. With burial, the plant material was subjected to high temperatures and pressures. This caused physical and chemical changes in the vegetation, transforming it into peat and then into coal.
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