Linda Yulisman, The Jakarta Post, Jakarta | Fri, 06/01/2012 8:51 AM

The government is considering setting a production quota for coal miners and requiring them to register to export coal, a senior official says.

Indonesia, the world’s largest exporter of thermal coal, has seen boom in the past decade, with domestic production jumping almost 500 percent from 1998 to 2010 to an annual output of 275 million tons.

The boom has raised concerns (menimbulkan kekhawatiran; menyuarakan keprihatinan) for the nation’s future energy security, prompting (mendorong) the creation of new arrangements for coal production to prioritize domestic interests, Edi Prasodjo, the Energy and Mineral Resources Ministry’s coal mining chief said.

“At present, coal can be exported freely […] We may upgrade its status as a commodity whose exports need to be supervised,” Edi told reporters on the sidelines of a mining conference in Jakarta, declining to elaborate on current discussions.

Indonesia produced 370 million tons of coal in 2011 and 108 million tons in the first quarter of 2012, according to the Indonesian Mining Association (APBI).

The government has required domestic miners, including coal miners, to allocate a proportion of their annual output to the domestic market since 2010.

This was done to aid local manufacturers, who often complained about energy and fuel shortages, mainly shortages of coal, as higher overseas prices have encouraged the export of coal.

In 2012, coal producers have been required to allocate 24.72 percent of their output to domestic buyers.

Separately, Trade Ministry foreign trade chief Deddy Saleh said that the ministry would propose a coal export arrangement similar to a recent arrangement promulgated (diumumkan) for mineral commodities, which would also include verification and technical tracking mechanisms for registered exporters.

The export arrangement, along with a 20 percent export tax on 65 mineral commodities, has been promoted to encourage investors to process raw materials in Indonesia.

“It would be better for coal trading is also regulated the way the minerals are. However, so far, there’s no been no talk yet between relevant ministries on this,” Deddy said in a statement that was emailed to The Jakarta Post.

APBI executive director Supriatna Suhala declined to comment on the proposed arrangement, calling it unclear.

Earlier, the mining association has said that it would prefer a production quota for each company rather than export tax, because, at present, coal miners pay a different range of taxes to the government.

Meanwhile, an energy expert at the ReforMiner Institute, Komaidi Notonegoro, said the new arrangement would benefit domestic energy security as coal supplies for domestic power stations would improve.

The local manufacturing industry has in recent years suffered from an acute shortage of gas that has already hindered their productivity.

Production activities using gas are also more expensive compared to coal.