Directorate General Of Mineral And Coal
Ministry Of Energy And Mineral Resources
Republic Of Indonesia

INDONESIAN COAL POLICY

Presented for Indonesia-Japan Coal Seminar 2020
The Ritz-Carlton Hotel
Jakarta, 23 January 2020

DIRECTORATE GENERAL OF MINERAL AND COALMINISTRY OF ENERGY AND MINERAL RESOURCES
REPUBLIC OF INDONESIACONTENT
I. CURRENT POLICY
II. LICENSE SIMPLIFICATION

III. RESOURCES AND RESERVES

IV. COAL PRODUCTION AND EXPORTV. STATISTIC

VI. COAL DOWNSTREAMING
2

I. CURRENT POLICY3

I. CURRENT POLICY• Indonesian Constitution1945 Article 33 Section 3 : Natural
resources available on Indonesian soil should be utilized fully
for the prosperity of the people

Mining for the prosperity of the people
S
U
S
T
A
I
N
A
B
L
E

SUPPORTING
PILAR
LAW:
• ENERGY LAW• INDUSTRIAL
LAW• LAW ONREGIONAL
GOVT• FORESTRY
LAW• ENVIRONMENTAL LAW

MAIN PILAR

MAIN PILAR

MAIN PILARMINING LAW(NUMBER
4/2009)GOVERNMENTREGULATION• PP 22 /2010• PP 23 /2010• PP 55 /2010• PP 78 /2010• PP 1 / 2017

• MEMRREGULATION• MEMRDECISION(KBN)• DIRECTOR
GENERALREGULATION• DG DECISIONSUPPORTINGPILAR
OTHER POLICY:• NATIONALENERGYPOLICY• MASSTER PLAN
OF NATIONAL
INDUSTRY• NATIONAL
INDUSTRY
ENERGY• FISCAL POLICYMINERAL AND COAL POLICYINDONESIAN CONSTITUTION 1945 Article 33 Section 3

BASELINE : MINERAL AND COAL RESOURCES AND RESERVES

E
N
V
I
R
O
N
M
E
N
T

 Achieve economic independence by
driving the strategic sector of thedomestic economy.

 Mineral and coal mining activities
must provide maximum benefits to
support national development
4II. LICENSE SIMPLIFICATION

5

LICENSE SIMPLIFICATION IN MINERAL AND COALREVOKING REGULATION/LICENSING

MEMR Regulation
Number 8/2018 regarding
Revocation of MEMR
Decision Related toMineral and CoalBusiness Activities

MEMR Regulation
Number 11/2018
regarding Procedure forGranting Areas, Licensing,and Reporting on Mining
Business Activities

MEMR Regulation
Number 25/2018 regarding
Mineral and Coal Mining
Business Activities

MEMR Regulation
Number 26/2018
regarding
Implementation of Good
Mining Practice andSupervision of Mineraland Coal Mining

6

MANAGEMENT IMPROVEMENT
Minerba Online Monitoring Modul Verifikasi
System (MOMS) Penjualan (MVP)

Minerba One Map
Indonesia (MOMI)

E-PNBP

Minerba One Data
Indonesia (MODI)

Can be downloaded on Playstore :MODI Dashboard ESDM
modi.minerba.esdm.go.id

Online Licensing

ON PROGRESSMINERS, SIKEMBAR, ELANG
EMS, EDW, RKAB ONLINE
7

III. RESOURCES AND RESERVES

8

COAL RESOURCES AND RESERVES
MalukuResources : 8,217
Reserves: -Sumatera

Kalimantan

Resources : 53.724,492
Reserves : 13.894,69

Resources : 97.408,207
Reserves: 25.986,916

Sulawesi
Resources : 64,179
Reserves : 2,132

Java
Resources : 58,468
Reserves : 7,217

Papua
Resources : 135,84
Reserves : -*In million ton

Total Amount (Billion ton)

Sources :Resources
Reserves: 151.399,40: 39.890,96

Geological Agency, MEM
9RESOURCES AND RESERVES BASED ON CALORIFIC VALUECOAL QUALITYRESOURCE (Million tons)
Hypothetic

RESERVE (Million tons)

Inferred

Indicated

Measured

Total

Probable

ProvenTotal

Low rank

433.03

14,580.77

15,375.29

16,386.73

46,775.82

8,090.27

7,337.83

15,428.10

Medium rank

3,288.04

22,744.14

32,954.32

29,669.44

88,655.93

8,160.49

13,586.92

21,747.41

High rank

598.084,611.77

2,413.92

3,177.91

10,801.68

887.56

1,026.12

1,913.68

Very high rank

2.06

2,131.79

1,502.69

1,529.43

5,165.97

422.51379.26801.774,321.21

44,068.47

52,246.22

50,763.51

151,399.40

17,560.83

22,330.13

39,890.96

TOTAL
Note:
Low rank
Medium rank
High rank
Very high rank

Source: Geological Agency 2019

<5100 Cal/gr
5100 – 6100 Cal/gr
6100 – 7100 Cal/gr>7100 Cal/gr

10

IV. COAL PRODUCTION AND EXPORT11

COAL PRODUCTION AND EXPORTCOAL PRODUCTION AND EXPORT 2019

PRODUCTION PLAN 2020

Plan

ActualPercentage

Production

489,73610,03

125%

PKP2B

324,97331,45102%

IUP OP Pusat

58,97

60,51

103%

IUP OP PMDN

105,79218,07458,8206%

Export* Data as of December 2019** Volume in million ton

Actual production is bigger than national production
planned:
1. Installed production capacity is bigger that national target.
2. Companies requesting for production increase
3. Production plan of IUP OP PMDN is larger than the quota set
by Government
4. Decline in price resulting in increase in production
5. Central and Regional Govt need the export revenue fromcoal

 Nationala. Central
b. Regional= 550 juta ton= 340 juta ton= 210 juta ton

Considering:

1. Optimal coal production (no over supply& stable price);
2. Market potential (domestic & export);
3. Production capacity and company’s
feasibility is in accordance with the
Feasibility Study and Environmental
Impact Analysisi;
4. Non tax revenue in mineral and coal for2020 is set at IDR 44,2 T
12

DOMESTIC COAL DEMAND 2020-2024
No

End User

1 PLN
2

2020

2021

2022

2023

2024

Kebutuhan Batubara Domestik Berdasarkan
Kelas Batubara

109.000.000 121.000.000 129.000.000 135.000.000 137.000.000

SMELTING & REFINING PLANT16.522.511

16.723.260 16.634.188

16.658.414

16.733.465

3 FERTILIZER

1.733.110

1.731.098

1.731.098

1.731.098

1.733.110

4 CEMENT

14.545.630

15.016.188 15.492.118

15.991.688

16.650.335

5 TEXTILE

6.543.547

6.543.547

6.543.547

6.543.547

6.543.547

6 PAPER

6.644.677

7.109.804

7.607.491

8.140.015

8.709.816

10.53
011.488

12.44
4

13.40
2

14.359

7 BRIQUET
Total

155.000.006 168.135.385 177.020.886 184.078.164 187.384.632

Note:
The numbers above is calculated based on data reconciliation from power plant(RUPTL PLN 2019-2028) and industrial needs

11% 3%

86%

kalori rendah (<5.100)
kalori sedang (5.100-6.100)
kalori tinggi-sangat tinggi (>6.100)

13

COAL EXPORT TO JAPAN 2014 - 201914

COAL EXPORT BY COUNTRY DESTINATION 201815

COAL IN ENERGY MIXPP KEN 79/2014

2018*

TARGET 2025

TARGET 2050*) Data taken from Secgen DEN,
DGE, Pusdatin and DG NRE

YearPrimary Energy Supply

MTOE

Volume Equality

Primary Energy Mix

2025

Coal

119,8

205,3 Juta Ton

30,0%

2050

Coal

255,9

438,8 Juta Ton

25,3%

Source: Presidential Reg
22/2017 RUEN

16

DOMESTIC MARKET OBLIGATIONNODMO POLICY 2018-2019

1 Coal price for power plant is regulated by Go
vernment (Coal price index USD 70/Ton)
2

DMO applies for all coal companies

3 Minimum percentage for DMO is 25% of
total production

Sanction for offender: production cut off (44 times DMO realized)
5 Quota transfer for companies that can notmeet DMO
6

Reward: Increase production for companies
that can meet DMODMO POLICY 2020
CONTINUE

Coal price for power plant is regulated by Govern
ment (Coal price index USD 70/Ton)

CONTINUE

DMO applies for all coal companies

CONTINUE

Minimum percentage for DMO is 25% of total
production

REPLACED

Sanction for offender: Pay DMO compensation fee and additional sanction of production cut off forcompanies breaching contract agreement with PL
N
Quota transfer does not apply

ERASESERASED

No reward applies, however companies complying
with DMO requirement does not need to pay DM
O compensation fee
17COAL EXPORT 2014-2018
30,000,000

440,000

430,000

25,000,000

420,000

410,000
20,000,000
400,000

390,000
15,000,000
380,000

370,000
10,000,000
360,000

350,000

5,000,000

340,000-

330,000
2014

2015

2016

2017

2018

18

MINERAL AND COAL EXPLORATION (1)Energi sebagai Modal Pembangunan
350.00250.00USD Juta

Total Investasi
Exploration

300.00200.00150.00100.0050.00-

GREENFIELD EXPLORATION (BATUBARA)DEVELOPMENT EXPLORATION (BATUBARA)GREENFIELD EXPLORATION (MINERAL)DEVELOPMENT EXPLORATION (MINERAL)TOTAL INVESTASI EXPLORATION

2016
0.46
15.02
18.30
31.70
65.48

2017
1.02
19.38
0.80
93.40
114.60

2018
6.81
33.25
9.30
96.50
145.86

2019
6.10
95.60
49.50
123.00274.202020
5.51
104.6654.40
135.30299.87This trend is more or less triggered by:
1. Trend in world commodity price index;
2. Ease of getting Leasehold of Forest Area License for exploration activity (Ministr of Forestry and Environment Reg No.
27/2018)
Exploration Expenditure is only 3% of the total investment in mineral and coal mining
19

MINERAL AND COAL EXPLORATION (2)Energi sebagai Modal Pembangunan

CHALLENGE
LOW ACTIVITY RELATED TO
GREENFIELD EXPLORATIONBARRIER IN EXLORATIONACTIVITYUTILIZATION OF
INFORMATION ANDTECHNOLOGY (IT)• SOLUTION• PROMOTE EXPLORATION BY JUNIOR MINING COMPANY• ASSIGNING SOEs OR PRIVATE SECTOR TO DO EXPLORATION ON NEW AREA
• REVIEWING THE DATA AND INFORMATION COMPENSATION FOR SPECIFIC AREA

• SYNCHRONIZING EXPLORATION ACTIVITIES WITH OTHER SECTOR' AT THE SAME AREA
• COOPERATION AGREEMENT WITTH MINISTRY OF ENVIRONMENT AND FORESTRY (MEF)• PROVIDING FUNDING FOR ADVANCED EXPLORATION• DATA AND INFORMATION ON EXPLORATION IS MANAGED BY GOVERNMENT• REGULATION TO MANAGE CONFIDENTIALITY OF DATA AND ITS UTILIZATION

20

VI. COAL DOWNSTREAMING AND ADDED VALUE

21

COAL VALUE ADDED

Coal Gasification

Underground Coal
Gasification (UCG)

Coal Liquefaction

Gov Reg number
23/2010 jo Gov Reg
Number 77/2014,
Article 94 Section 1
MEMR Reg Number
25/2018
Article 16

Cokes Making

Coal Upgrading

Coal Added Value isobligated when theeconomically proventechnology is available

Coal Briquetting

Coal slurry/Coalwater mixture
22

CURRENT PROGRESS
Progress of coal gasification
HoA Coal to Chemicals among PT Pertamina, Pupuk Indonesia, andChandra Asri was signed in Desember 2017
MoU Kerja Joint Project Coal to DME was signed in Peranap in November
2018
Principle Agreement to form a joint venture for Coal to DME Project
was signed in Peranap in Januari 2019
Follow up:
Consideration of giving incentive from coal: royalty incentive
or special coal price for petrochemical industry
Pricing Guarantee for DME resulting from coal gasification
Finishing the Feasibility Study for project in Tanjung Enim &PeranapTANJUNG ENIM – South
Sumatera

Coal Briquette
In operation• Briquette PT Bukit Asam (South
SUmatera)
Feedstock: 30-40 thousand,product: 10-20 thousand(ton/year)• Briquette PT Thriveni (South
Sumatera)
Feedstock: 130 thousand,
Product: 79-85 thousand(ton/year)

Coal Upgrading

In operation

There are five coal Upgrading operating in Indonesia:

1. PT ZJG Resources Tech Indonesia (Tj Selor. North Kalimantan)
2. PT Asiatic Universal Indonesia (Kutai Kartanegara, East
Kalimantan)
3. PT Borneo Pasifik Global (Kutai Kartanegara, East Kalimantan)
4. PT Prima Coal Chemical (Barito Timur, Central Kalimantan)
5. PT Kartika Prima Abadi (Buton, Southeast Sulawesi)

Cokes Making

Construction

 Semi Coking Coal Plant PT . Megah Energi Khatulistiwa (MEK)in Bulungan, North Kalimantan
 Feedstock :1.000.000 ton/year(500.000 ton with calorific value 3100 kkal/kg + 500.000 ton
calorific value 6300 kkal/kg)
 Product : 600 thousand ton Semi Coke, 50 thousand Coal Tar

Coal Quality : 4000
kcal/kg
Industry : Coal to DMM(DME, Methanol, MEG)

Coal Liquifaction
PT Bukit Asam Gasification project is scheduled tooperate commercially by 2024

Coal Slurry

No project yet
23

ROAD MAP COAL GASIFICATION

2020

2021

2022

2023

2024

1.Prepare a comprehensive study on financial, technical and nontechnical aspects related to coal gasification
2.Prepare regulation related to guidelines for the use of coalgasification and the coal gasification concession
3.Encouraging other state owned company (SOC) to develop coalgasification project (particularly first generation of Coal Contract ofWorks)
1St Gen CCOW:• 1. PT Berau Coal• 2. PT Arutmin Indonesia• 3. PT Adaro Indonesia• 4. PT Indominco Mandiri• 5. PT Kaltim Prima Coal• 6. PT Kendilo Coal• 7. PT Kideco Jaya Agung• 8. PT Multi Harapan Utama

Once PT BA starts its
operation in 2023, other
SOC is expected to also
produce DME. So that coaldownstreaming will have agreater effect on Indonesia's
economic growth Coal to DMM (DME-Methanol-MEG) project PT
Bukit Asam Tanjung Enim, South Sumatera
 Coal consumption: 8 million tons/year (GAR 4000
kcal/kg) Product : 1.4 million tons DME, 300 thousand tons
Methanol, 4250 thousand ton MEG

MEMR policy to support this project:
Incentive to reduce coal royalty and/orSpecial pricing for coal to DMM project24

DIMETHYL ETHER (DME) AS NEW ENERGY
Indirect Synthetic process

SYNGAS(CO/H2/CO2)

Methanol

DME

CH3OH

CH3OCH3

Methanol + DME

COAL

Direct Synthetic Process

DME can be produced fromseveral raw materials such as:
Natural Gas, Coal or Biomass;

DME can be produced from Low
Rank Coal. Indonesia has large
potential of low rank coal

COAL UTILIZATION FOR DME :1.Saving foreign exchange:
reducing importation of LPG
2.Low Rank Coal Utilization:

DME as alternative fuel toreplace LPG

Coal for domestic use

3. Increasing Utilization of New
Energy : Coal Gasification to DME
4. Investment : promoting
economic growth
5. Pemerataan Pelayanan Gas :•Demand of LPG keeps rising (7 mio
MT, 2016). 67% LPG demand is
supplied by importation (4.7 mio
MT)

DME UTILIZATIONDME is an alternative clean fuel that canreach high performance in combustion
with low CO, Nox emission :1. Household fuel(as substitute for LPG)
2. Fuel for transportation
3. Fuwl for power plant
4. Can be processed into side products suchas Hydrogen as sustainable future energy
5. For aerosol (non corrosive)

Some countries has replaced LPG
with DME•Untuk rumah tangga dan industri•Pertumbuhan kawasan ekonomi baru

25

TAX INCENTIVE AND NON TAX REVENUE FOR COAL DOWNSTREAMING
Developing coal processing facility is high capital investmentthat requires fiscal certainty to enable business entities doing
economic feasilbility study for the projectCurrently coal processing has not attracted the interest ofcapitalists because of the high investment that must be spentand the lack of fiscal incentives from the Government.

To attrack investment in coal downstreaming, Government
needs to offer facilities in terms of taxation and non-tax staterevenue, such as: Tax Holiday (10 or 20 years)
 Tax allowance Reduction and/or elimination of coal royalty tariff for low rankcoal
 Elimination of VAT for coal downstreaming Reduction of Capitalization Figures in calculating Mining andLand Taxes Facility of exemption from import duty and VAT on the importof goods, equipment and supporting machinery for coalmining downstreaming

Insentif pembebasan
PPN (PPN 0%)

26

COAL GASIFICATION PT BUKIT ASAM
Overview Coal Gasification Project of PT BUKITASAM Coal to DME, Methanol, MEG (DMM)27www.minerba.esdm.go.id
www.esdm.go.id

28
28

NATIONAL MEDIUM TERM DEVELOPMENT PLAN 2020 - 2024
RENSTRA KESDM 2020 - 2024

STRATEGIC POLICY IN MINERAL AND COAL 2020 - 20241
National
Resilience








3



Human Resources
Development as Aset

Inventory of resources and reserves
Production control
Management of Export and Import
Conservation
Optimalization of non-tax staterevenueCreating roadmap andimplementing bureaucratic reform
Improving the competences ofhuman resources
Analysis of training andcompetences needs
Evaluating staff performance2

Mineral and coalfor resilientindustry




4




Fit Organization


5Innovation andModernization ofInformation,
Communication
and Technology
(ICT)






Providing modern information
technology
Strengthening integration systemwith related organization
Increase the utilization andmaintenance of Information
Technology
Improving services and accessibility

Increasing local content and local
expenditure
Improving effective supervision andmonitoring
Monitoring regulation and policy
compliance
Enhancing law certainty and easeof doing business

Synchronizing data management
Implementing Internal Control
SystemAdjustment of organizational
structure and function
Evaluating business process

1. Inventory

2. Management

INDONESIAN MINING POLICY

4. People’s mining

3. Mining Environmental
Management29