Reuters reported that Indonesia, the world top exporter of thermal coal is considering an export tax on the power plant fuel, but implementation is unlikely and would face fierce opposition.

Mr Supriatna Suhala executive director of the Indonesian Coal Mining Association said government talks involving the industry over an export tax for coal from Indonesia which holds some of the world richest mineral deposits have been ongoing for several months.

He said that "It is still only an idea. This is not a good sign for the investor. He added that any export tax would hit foreign investors in Indonesian coal, after they had ploughed cash into projects, equipment and related infrastructure.”

Indonesian energy ministry official Thamrin Sihite was unavailable for comment.

Mr Suhala said "An export tax is a very long way away. First the government has to revise the law then re-negotiate contracts so it cannot be implemented in the near future."

The coal export tax discussions are separate to the ongoing drafting of rules requiring miners to carry out minimum processing on minerals before export. In an effort to support the domestic industry and add value to its coal exports, the Indonesian energy and minerals ministry is drafting a regulation that would by 2014 require coal producers to upgrade low quality coal to a medium-quality coal before exporting.

The mining industry says Indonesia needs to delay the implementation of the planned regulation, to enable the much needed value-added investments to catch up.

Mr Singgih Widagdo the director at the Indonesian Coal Society, referring to the export tax idea said "No decision has yet been made. No figures have been issued yet.”

He added that "It's difficult because if the government wants to introduce an export tax, at the same time it is in the process of re-negotiating mining laws. He also said that major political parties would be opposed to such a tax on coal exports.”

Mr Singgih Widagdo said "It's not easy for the government to draft an export tax during the (2014) re-negotiation process is still running, adding that he didn't believe it would ultimately happen.

Industry groups say Indonesian output will hit 340 million tonnes to 354 million tonnes for 2011 and is seen rising at least 10% annually over the next five years to lead global growth in thermal coal exports and meet rising demand from China, India and South Korea.

(Sourced from Reuters)