Indonesia cancels requirement to use benchmark prices in minerals, coal sales
FILE PHOTO: A man stands on a boat as coal barges queue to be pulled along Mahakam river in Samarinda, East Kalimantan province, Indonesia, August 31, 2019. REUTERS/Willy Kurniawan/File Photo
JAKARTA :Indonesia has scrapped a requirement to use government benchmark prices as the floor price in minerals and coal sales, a mining ministry decree reviewed on Monday showed.
Issued earlier this month, the decree allowed miners to sell minerals and coal below the government-set benchmark prices, but production levies and tax obligations arising from the transactions would be based on the benchmark prices.
Jakarta began mandating the use of a coal benchmark price for transactions on March 1, intending to exert bigger control over the value of domestic and export transactions for the fuel commodity. Before that, the price had already been used to calculate royalties.
However, both buyers and exporters preferred to use the Indonesian Coal Index to price shipments because the benchmark is opaque, updated less frequently and also more expensive.
Indonesia's government also issues benchmark prices for a number of nickel products, copper, tin, cobalt and bauxite, among others.
Indonesia exported 238 million tons of thermal coal in the first half of this year, a 20 per cent increase from a year ago.
