IMA-Daily Update Page 1

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The government will issue it soon, see the important points in the Minerba RPP Segera diterbitkan pemerintah, simak poin-poin penting di RPP Minerba SOEs Get Privileges in RPP Minerba, Are They Happy? BUMN Dapat Keistimewaan dalam RPP Minerba, Happy Nggak Ya? Adaro Energy (ADRO) supports the discussion on the RPP for the implementation of minerba activities Adaro Energy (ADRO) dukung pembahasan RPP pelaksanaan kegiatan minerba The Derivative Regulations on the Minerba Law do not even limit the area of land for ex-KK and PKP2B Aturan Turunan UU Minerba Justru Tidak Batasi Luas Lahan Eks KK dan PKP2B The policy of expanding the mining area in the Minerba RPP, said Arutmin Indonesia Kebijakan perluasan wilayah tambang di RPP Minerba, ini kata Arutmin Indonesia RPP Minerba is being discussed, this said Bumi Resources Group (BUMI) RPP Minerba sedang digodok, ini kata Grup Bumi Resources (BUMI) RPP Minerba: BUMN Can Transfer WIUP Maximum 49% RPP Minerba: BUMN Dapat Alihkan WIUP Maksimal 49% PP Minerba will emphasize the obligation of minerba reserve and mine reclamation fund PP minerba bakal tekankan kewajiban dana cadangan minerba dan reklamasi tambang The price of coal 'rises from the grave', does it last long? Harga batubara 'bangkit dari kubur', bertahan lama gak nih? Race is on for Indonesia’s untapped rare earths

Kontan CNBC Indonesia Kontan Dunia Energi Kontan Kontan CNBC Indonesia Kontan CNBC Indonesia Asia Times

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Zinc price to enter long term structural decline in 2021 – report Newcrest taps into molybdenum at Cadia AfriTin ramps up August output to over 37 t of tin concentrate Running behind schedule: 54 mining projects of Coal India facing delays IEEFA: Southeast Asian banks need to reduce coal risks

Mining.com Australian Mining Mining Weekly The Economic Times IEEFA

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IMA-Daily Update Page 3

The government will issue it

soon, see the important points in the Minerba RPP

Reporter: Dimas Andi | Editor: Anna Suci Perwitasari

THE GOVERNMENT, through the Ministry

of EMR, is trying to finalize one of the Draft Government Regulations (RPP) which is a

derivative of Law Number 3 of 2020 or the Mineral and Coal (Minerba) Law. The RPP

regulates the Implementation of Mineral and Coal Mining Business Activities.

Based on the copy of the draft RPP received by Kontan.co.id, this regulation

consists of 24 chapters and 202 articles. There are several articles which are quite

crucial for the continuity of the Indonesian mineral and coal mining industry.

For example, related to the extension of the Contract of Work (KK) or Coal Mining Exploitation Work Agreement (PKP2B) which later changed its status to a Special Mining Business Permit (IUPK).

This point is regulated in Article 107 where paragraph (1) notes that the IUPK as a continuation of the contract/ agreement operation is granted by the Minister based on the application submitted by the KK or PKP2B holder.

"IUPK as a continuation of contract / agreement operation is granted with the provisions (a) according to the remaining term of the KK or PKP2B and the first extension of 10 years and (b) a second extension of 10 years can be given," wrote the regulation as quoted by Kontan.co.id, Wednesday (9/9).

Segera diterbitkan pemerintah,

simak poin-poin penting di RPP Minerba

Reporter: Dimas Andi | Editor: Anna Suci Perwitasari

PEMERINTAH melalui Kementerian ESDM

tengah berupaya merampungkan salah satu Rancangan Peraturan Pemerintah (RPP) yang menjadi turunan dari Undang-Undang Nomor 3 Tahun 2020 atau UU Mineral dan Batubara (Minerba). RPP tersebut mengatur tentang Pelaksanaan Kegiatan Usaha Pertambangan Mineral dan Batubara.

Berdasarkan salinan draf RPP yang di-terima Kontan.co.id, beleid ini terdiri dari 24 bab dan 202 pasal. Terdapat beberapa pasal yang cukup krusial bagi kelang-sungan industri pertambangan minerba Indonesia.

Misalnya terkait perpanjangan Kontrak Karya (KK) atau Perjanjian Karya Peng-usahaan Pertambangan Batubara (PKP2B) yang kemudian berubah status menjadi Izin Usaha Pertambangan Khusus (IUPK).

Poin ini diatur dalam Pasal 107 yang mana ayat (1) mencatat bahwa IUPK sebagai kelanjutan operasi kontrak/perjanjian diberikan oleh Menteri berdasarkan per-mohonan yang diajukan oleh pemegang KK atau PKP2B.

“IUPK sebagai kelanjutan operasi kontrak/ perjanjian diberikan dengan ketentuan (a) sesuai sisa jangka waktu KK atau PKP2B dan perpanjangan pertama selama 10 tahun dan (b) dapat diberikan perpan-jangan kedua selama 10 tahun,” tulis aturan tersebut yang dikutip Kontan.co.id, Rabu (9/9).

IMA-Daily Update Page 4

The Minister can also grant this type of IUPK by considering the continuation of

operations, optimization of the potential for mineral and coal reserves in the context

of mineral and coal conservation from WIUPK for the production operation

activity stage, and national interests.

In Article 112, an IUPK as a continuation of contract/agreement operation as referred

to in Article 107 can be extended once for 10 years. This type of IUPK which is

integrated with processing and/or refining or development and/or utilization facilities

can be extended for 10 years each time.

Interestingly enough, Article 119 of this

regulation states that KK and PKP2B holders who apply for an IUPK as a

continuation of a contract /agreement operation can submit an application for an

area outside the WIUPK for the production operation stage to the Minister to support

their mining business activities.

This RPP also regulates the policy of

expanding and shrinking the Mining Business License Area (WIUP) and the

Special Mining Business License Area (WIUPK).

In article 132, holders of IUP and IUPK for

metal mineral or coal production operations activities can submit

applications for expansion of WIUP and WIUPK to the Minister.

The expansion of WIUP and WIUPK must meet a number of criteria, namely the area

of the expanded metal mineral WIUP is determined to be a maximum of 25,000

hectares (ha) while the area of the coal WIUP resulting from the expansion is

determined to be a maximum of 15,000 ha. The WIUPK area is determined according

to the evaluation results of the Minister.

Menteri juga bisa memberikan IUPK jenis ini dengan mempertimbangkan kelanjutan

operasi, optimalisasi potensi cadangan minerba dalam rangka konservasi minerba

dari WIUPK untuk tahap kegiatan operasi produksi, dan kepentingan nasional.

Di pasal 112, IUPK sebagai kelanjutan operasi kontrak/perjanjian sebagaimana dimaksud dalam Pasal 107 dapat diberikan perpanjangan sebanyak satu kali selama 10 tahun. IUPK jenis ini yang terintegrasi dengan fasilitas pengolahan dan/atau pemurnian atau pengembangan dan/atau pemanfaatan dapat diberikan perpan-jangan selama 10 tahun setiap kali perpan-jangan.

Yang cukup menarik, di Pasal 119 beleid ini tertulis bahwa pemegang KK dan PKP2B yang mengajukan IUPK sebagai kelanjutan operasi kontrak/perjanjian dapat mengajukan permohonan wilayah di luar WIUPK untuk tahap kegiatan operasi produksi kepada Menteri untuk menunjang kegiatan usaha pertambangan-nya.

RPP ini juga mengatur kebijakan perluasan dan penciutan Wilayah Izin Usaha Pertambangan (WIUP) dan Wilayah Izin Usaha Pertambangan Khusus (WIUPK).

Dalam pasal 132, pemegang IUP dan IUPK

untuk tahap kegiatan operasi produksi mineral logam atau batubara dapat meng-

ajukan permohonan perluasan WIUP dan WIUPK kepada Menteri.

Perluasan WIUP dan WIUPK harus memenuhi sejumlah kriteria, yakni luas

WIUP mineral logam hasil perluasan di-tentukan maksimal 25.000 hektare (ha)

sedangkan luas WIUP batubara hasil perluasan ditentukan maksimal 15.000 ha.

Adapun luas WIUPK ditentukan sesuai dengan hasil evaluasi Menteri.

IMA-Daily Update Page 5

"The area requested for expansion is an area that coincides with the initial WIUP and WIUPK and the area requested for expansion has the potential for continuation of mineralization/mineral ore body or coal sedimentation," said the RPP.

Then, in Article 136 it is stated that the WIUP and WIUPK can be partially reduced in areas based on (a) the application submitted by the IUP and IUPK holder to the Minister or (b) the evaluation result of the Minister in accordance with the provisions of the legislation.

In addition, WIUP and WIUPK can be returned entirely based on the request of the IUP and IUPK holder to the Minister.

A partial reduction of the WIUP and WIUPK areas based on the evaluation results of the Minister may be carried out on IUP and IUPK at the exploration activity stage which propose to increase the production operation stage.

“Wilayah yang dimohonkan per luasan merupakan wilayah yang berhimpit dengan WIUP dan WIUPK awal dan wilayah yang dimohonkan perluasan terdapat potensi kemenerusan mineralisasi/tubuh bijih mineral atau sedimentasi batubara,” ungkap RPP tersebut.

Kemudian, di pasal 136 disebut bahwa WIUP dan WIUPK dapat dilakukan penciutan sebagian wilayah berdasarkan (a) per-mohonan yang diajukan oleh pemegang IUP dan IUPK kepada Menteri atau (b) hasil evaluasi Menteri sesuai dengan ketentuan peraturan perundang-undangan.

Selain itu, WIUP dan WIUPK dapat dikem-balikan seluruhnya berdasarkan permohon-an pemegang IUP dan IUPK kepada Menteri.

Penciutan sebagian wilayah WIUP dan WIUPK berdasarkan hasil evaluasi Menteri dapat dilakukan terhadap IUP dan IUPK tahap kegiatan eksplorasi yang mengajukan peningkatan tahap kegiatan operasi produksi.

SOEs Get Privileges in RPP Minerba, Are They Happy?

Anisatul Umah, CNBC Indonesia

THE GOVERNMENT is currently drafting a

government regulation (RPP) as an implementing rule of Law No. 3 of 2020 concerning Minerals and Coal (Minerba Law). In this RPP, mining sector SOEs will get privileges in terms of the mining operational period.

This can be seen from the RPP document on Mineral and Coal Mining Business Activities obtained by CNBC Indonesia. Based on Article 53 of this RPP,...

BUMN Dapat Keistimewaan dalam RPP Minerba, Happy Nggak Ya?

Anisatul Umah, CNBC Indonesia

PEMERINTAH tengah membuat rancangan

peraturan pemerintah (RPP) sebagai aturan pelaksana dari Undang-undang No. 3 tahun 2020 tentang Mineral dan Batu Bara (UU Minerba). Di dalam RPP ini BUMN sektor per-tambangan akan mendapatkan keistimewaan dari sisi jangka waktu operasional tambang.

Hal ini terlihat dari dokumen RPP tentang Kegiatan Usaha Pertambangan Mineral dan Batu Bara yang diperoleh CNBC Indonesia. Berdasarkan Pasal 53 RPP ini...

IMA-Daily Update Page 6

Based on Article 53 of this RPP, it is stated that "the period of production operations for IUP (Mining Business License) owned by SOEs can be extended for 10 years every time it is extended."

Does the RPP mean that SOEs are not limited in time to carry out their mining production operations?

Several state-owned companies in the mining sector include PT Bukit Asam Tbk (PTBA) in the coal sector, PT Aneka Tambang Tbk (ANTM) in the nickel and gold mining sector, PT Timah Tbk (TINS) in the tin mining sector, and Mining Industry Indonesia (MIND ID) or PT Inalum as the holding of a mining SOEs.

In this regard, CNBC Indonesia has also tried to ask for responses from a number of state-owned mining companies. However, unfortunately, none of these SOEs would like to provide further comments regarding the privileges of SOEs in the Minerba RPP that is currently being drafted.

PT Bukit Asam Tbk (PTBA) Corporate Secretary Apollonius Andwie C. said that regarding this matter, his party did not want to comment.

"Regarding (Minerba RPP), we cannot comment yet," he said via short message to CNBC Indonesia, Wednesday (09/09/ 2020).

The same thing was also conveyed by Mining Industry Indonesia (MIND ID) as Holding SOEs Mining. MIND ID Senior Vice President Corporate Secretary Rendi Witular was reluctant to comment.

"Wow, if it's related to RPP, we can't comment," he explained via short message.

In this RPP, it is stated that IUP holders generally have a time limit for the extension of the production operation period, including:

Berdasarkan Pasal 53 RPP ini disebutkan bahwa "jangka waktu kegiatan operasi produksi untuk IUP (Izin Usaha Pertam-bangan) yang dimiliki oleh BUMN dapat diberikan perpanjangan selama 10 tahun setiap kali perpanjangan."

Apakah berdasaran RPP ini artinya BUMN tidak dibatasi waktu dalam menjalankan kegiatan operasi produksi tambangnya?

Beberapa BUMN sektor pertambangan antara lain PT Bukit Asam Tbk (PTBA) di sektor batu bara, PT Aneka Tambang Tbk (ANTM) di sektor tambang nikel dan emas, PT Timah Tbk (TINS) di sektor tambang timah, serta Mining Industry Indonesia (MIND ID) atau PT Inalum sebagai holding BUMN tambang.

Terkait hal ini, CNBC Indonesia pun men-coba meminta tanggapan dari sejumlah BUMN sektor pertambangan. Namun sayangnya tak satu pun BUMN tersebut ingin memberikan komentar lebih lanjut terkait keistimewaan BUMN di dalam RPP Minerba yang tengah disusun ini.

Sekretaris Perusahaan PT Bukit Asam Tbk (PTBA) Apollonius Andwie C. mengatakan terkait hal ini pihaknya belum mau memberikan komentar.

"Terkait dengan (RPP Minerba ini) saat ini kami belum bisa berkomentar dulu ya," ucapnya melalui pesan singkat kepada CNBC Indonesia, Rabu, (09/09/2020).

Hal yang sama juga disampaikan Mining Industry Indonesia (MIND ID) sebagai Holding BUMN Pertambangan. Senior Vice President Corporate Secretary MIND ID Rendi Witular pun enggan berkomentar.

"Wah kalau terkait RPP kita nggak bisa komen," paparnya melalui pesan singkat.

Dalam RPP ini disebutkan bagi pemegang IUP secara umum memiliki batasan waktu perpanjangan masa operasi produksi, antara lain:

IMA-Daily Update Page 7

For IUPs not integrated with the mineral or coal downstream process, the contract extension period is as follows:

- For metal mineral commodities, can be extended twice with each extension for 10 years.

- Non-metal minerals, can be extended for 2 x 5 years.

- Certain types of non-metal minerals, can be extended for 2 x 10 years.

- Rock, can be extended by 2 x 5 years.

- Coal, can be extended for 2 x 10 years.

However, for those who are integrated with downstream activities, the production operation period can be extended for 10 years each time. This means that, similar to SOEs, IUP holders whose mines are integrated with downstream activities are also not given a t ime limit for the operation.

For holders of non-integrated IUP with downstream, who have received two extensions, they must return the IUP Area (WIUP) to the Minister. And, within a period of three years before the production operation ends, IUP holders must submit a report on the presence of mineral or coal potential and reserves to the Minister.

As for Article 44 in this Draft PP, it is stated that before the license extension is carried out, the production operation period for the Production Operation IUP holder is given no later than:

- 20 years for metallic minerals,

- 10 years for nonmetal minerals,

- 20 years for certain types of non-metal minerals,

- 5 years for rock, and

- 20 years for coal.

Bagi IUP tidak terintegrasi dengan proses hilirisasi mineral atau batu bara, masa perpanjangan kontrak sebagai berikut:

- Untuk komoditas mineral logam, dapat dua kali perpanjangan dengan masing-masing perpanjangan selama 10 tahun.

- Mineral bukan logam, dapat perpan-jangan 2 x 5 tahun.

- Mineral bukan logam jenis tertentu, dapat perpanjangan 2 x 10 tahun.

- Batuan, dapat perpanjangan 2 x 5 tahun.

- Batubara, dapat perpanjangan 2 x 10 tahun.

Namun, bagi yang terintegrasi dengan kegiatan hilirisasi, maka jangka waktu operasi produksi dapat diberikan perpan-jangan selama 10 tahun setiap kali perpan-jangan. Artinya, sama halnya dengan BUMN, bagi pemegang IUP yang tambang-nya terintegrasi dengan kegiatan hilirisasi juga tidak diberikan batas waktu masa operasi.

Bagi pemegang IUP non terintegrasi dengan hilirisasi, yang telah memperoleh perpan-jangan dua kali, maka ia harus mengem-balikan Wilayah IUP (WIUP) kepada Menteri. Dan, dalam jangka waktu tiga tahun sebelum operasi produksi berakhir, pemegang IUP harus menyampaikan laporan mengenai keberadaan potensi dan cadangan mineral atau batu bara kepada Menteri.

Adapun pada Pasal 44 dalam Rancangan PP ini disebutkan bahwa sebelum dilakukan perpanjangan izin, jangka waktu operasi produksi bagi pemegang IUP Operasi Produksi diberikan paling lama:

- 20 tahun untuk mineral logam,

- 10 tahun untuk mineral bukan logam,

- 20 tahun untuk mineral bukan logam jenis tertentu,

- 5 tahun untuk batuan, dan

- 20 tahun untuk batu bara.

IMA-Daily Update Page 8

However, metal minerals that are integrated with processing and or refining facilities (smelters) are given a period of up to 30 years. Likewise, coal which is integrated with development and/or utilization is given a period of up to 30 years. (wia)

Namun bagi mineral logam yang ter-integrasi dengan fasilitas pengolahan dan atau pemurnian (smelter) diberikan jangka waktu hingga 30 tahun. Begitu juga dengan batu bara yang terintegrasi dengan pengem-bangan dan atau pemanfaatan diberikan jangka waktu hingga 30 tahun. (wia)

Adaro Energy (ADRO) supports the discussion on the RPP for

the implementation of minerba activities

Reporter: Dimas Andi | Editor: Herlina Kartika Dewi

THE DRAFT Government Regulation

(RPP) on the Implementation of Mineral and Coal Mining Business Activities (Minerba) continues to be finalized by the government. In the future, this PP will become a derivative regulation from Law No. 3 of 2020 concerning Minerba Mining.

Citing a copy of the PP Minerba draft received by Kontan.co.id, this regulation

discusses the procedures for mining permits and the expansion and contraction

of mining areas. Not only that, this draft regulation will regulate a number of new

burdens for mineral and coal producers, such as levies on mineral and coal reserve

resilience funds.

In addition, there is also a post-mining reclamation obligation with a 100%

success rate for holders of Contract of Work (KK) and Coal Mining Concession

Contracts (PKP2B) who receive contract extensions in the form of Special Mining

Business Permits (IUPK).

Adaro Energy (ADRO) dukung pembahasan RPP pelaksanaan

kegiatan minerba Reporter: Dimas Andi | Editor: Herlina

Kartika Dewi

RANCANGAN Peraturan Pemerintah

(RPP) tentang Pelaksanaan Kegiatan Usaha Pertambangan Mineral dan Batubara

(Minerba) terus diselesaikan oleh pemerintah. Kelak, PP ini akan menjadi

beleid turunan dari Undang-Undang No. 3 Tahun 2020 tentang Pertambangan

Minerba.

Mengutip salinan draf PP Minerba yang diterima Kontan.co.id, aturan ini mem-

bahas tata cara perizinan minerba beserta perluasan dan penciutan wilayah tambang.

Tak hanya itu, draf aturan ini akan mengatur sejumlah beban baru bagi

produsen minerba, seperti pungutan dana ketahanan cadangan minerba.

Selain itu, terdapat juga kewajiban rekla-masi pascatambang dengan tingkat

keberhasilan 100% bagi pemegang Kontrak Karya (KK) dan Perjanjian

Kontrak Pengusahaan Pertambangan Batubara (PKP2B) yang mendapat per-

panjangan kontrak dalam bentuk Izin Usaha Pertambangan Khusus (IUPK).

IMA-Daily Update Page 9

PT Adaro Energy Tbk (ADRO) expressed its support for the existence of the Minerba

RPP which is currently being discussed within the government scope.

Adaro Energy's Head of Corpor ate

Communications Febriati Nadira said that ADRO as a company that always applies

the principles of good corporate governance will certainly continue to

follow the applicable regulations.

"We hope that regulations in the coal industry can make national companies like

ADRO continue to exist and support national energy security ," she said,

Wednesday (9/9).

The existence of regulations is also

expected to spur ADRO to contribute to the state in the form of royalties, taxes, labor,

CSR activities, and others.

In addition, regulations that support mining activities are also very important

considering that the coal sector is still one of the leading sectors to contribute to

foreign exchange and support the country's economy.

In the previous news, the Director General

of Mineral and Coal at the Ministry of EMR, Ridwan Djamaluddin, stated that the

regulations on the latest derivative of the Minerba Law basically have not been

discussed by the government. "We will publish after being issued," he said,

Wednesday (9/9).

PT Adaro Energy Tbk (ADRO) menyatakan

dukungannya terhadap keberadaan RPP

Minerba yang tengah dibahas di lingkup

pemerintah tersebut.

Head of Corporate Communications Adaro

Energy Febriati Nadira mengatakan, ADRO

sebagai perusahaan yang senantiasa

menerapkan prinsip tata kelola per-

usahaan yang baik tentu akan terus meng-

ikuti aturan yang berlaku.

“Kami harap regulasi di industri batubara

dapat membuat perusahaan-perusahaan

nasional seperti ADRO tetap bisa eksis dan

ikut mendukung ketahanan energi

nasional,” ujar dia, Rabu (9/9).

Keberadaan regulasi juga diharapkan akan

memacu ADRO untuk berkontribusi

kepada negara dalam bentuk royalti, pajak,

tenaga kerja, kegiatan CSR, dan lain-lain.

Selain itu, aturan yang mendukung

kegiatan pertambangan juga sangat

penting mengingat sektor batubara masih

menjadi salah satu sektor yang di-

unggulkan untuk menyumbang devisa dan

menyokong perekonomian negara.

Dalam berita sebelumnya, Direktur

Jenderal Minerba Kementerian ESDM

Ridwan Djamaluddin menyatakan, aturan

turunan UU Minerba terbaru pada dasar-

nya belum selesai dibahas pemerintah.

“Kami akan mempublikasikan setelah

terbit,” kata dia, Rabu (9/9).

IMA-Daily Update Page 10

The Derivative Regulations on the Minerba Law do not even

limit the area of land for ex-KK and PKP2B Rio Indrawan

BUSINESS actors who have changed their

status from Contract of Work (KK) and Coal Mining Concession Work Agreement (PKP2B) are still able to increase the size of their mining area.

This is stated in the draft Government Regulation (PP) as a derivative of the Minerba Law No.3 of 2020.

In the RPP document received by Dunia Energi in article 119, it is written that KK and PKP2B Holders in applying for an IUPK as a Continuation of Contract/Agreement Operations can submit an application for an area outside the WIUPK for the Production Operation activity stage to the Minister to support their mining business activities.

Of course, if this is true, it is quite different from the government's discourse that wants to limit the land of the giant coal mining tycoons. The government has repeatedly asked to raise the mining land of PKP2B holders if they have switched to IUPK.

While still serving as Director General of Mineral and Coal at the Ministry of EMR, Bambang Gatot Ariyono, once said that the government would give contract extensions to PKP2B holders, but the land area would not be the same, aka limited.

"What we need is a 2 x 10 year extension that we can fulfill, but maybe not as large as the current one," said Bambang.

Aturan Turunan UU Minerba Justru Tidak Batasi Luas Lahan

Eks KK dan PKP2B Rio Indrawan

PELAKU usaha yang beralih statusnya dari Kontrak Karya (KK) dan Perjanjian Karya Pengusahaan Pertambangan Batu bar (PKP2B) ternyata masih bisa me-nambah luas wilayah tambangnya.

Hal itu tertuang dalam rancangan Per-aturan Pemerintah (PP) sebagai turunan dari Undang-Undang Minerba No 3 Tahun 2020.

Dalam dokumen RPP yang diterima Dunia Energi pada pasal 119 tertulis Pemegang KK dan PKP2B dalam mengajukan per-mohonan IUPK sebagai Kelanjutan Operasi Kontrak/Perjanjian dapat mengajukan permohonan wilayah di luar WIUPK untuk tahap kegiatan Operasi Produksi kepada Menteri untuk menunjang kegiatan Usaha Pertambangannya.

Tentu jika benar ini diterapkan cukup berbeda dengan wacana pemerintah yang mau membatasi lahan para taipan raksasa tambang batu bara. Berkali-kali peme-rintah mengisyaratan untuk menciuatkan lahan tambang para pemegang PKP2B jika sudah beralih ke IUPK.

Saat masih menjabat Direktur Jenderal Minerba Kementerian ESDM Bambang Gatot Ariyono pernah mengatakan perpan-jangan kontrak diberikan pemerintah kepada para pemegang PKP2B, namun untuk luasan lahannya tidak akan sama alias dibatasi.

“Yang dibutuhkan perpanjangan 2 x 10 tahun bisa kami penuhi, tetapi mungkin enggak seluas yang sekarang,” kata Bambang.

IMA-Daily Update Page 11

Not only that, Sugeng Suparwoto, the chairman of Commission VII DPR, also said that there was an intention to restrict land if PKP2B holders were granted a contract extension.

At that time, Sugeng stated that the reason for the maximum limitation of 15 thousand ha was determined based on the experience of past mining activities where tens of thousands of hectares had been given and managed for decades but what was actually worked on was not optimal.

"For example, only 30 years of exploitation, only 8 thousand hectares are used up, it is fair that later in the extended mineral and coal law, an area of 15 thousand hectares is given," he said.

There are seven PKP2B holders who have very large mining areas reaching thousands of hectares and even tens of thousands and are queuing to apply for a contract extension and want to change the contract to IUPK, namely PT Arutmin Indonesia with a land area of 57,107 hectares (ha). Then PT Kaltim Prima Coal (KPC) covering an area of 84,938 ha and PT Multi Harapan Utama covering an area of 39,972 ha.

Four other companies whose contracts will expire soon are PT Kendilo Coal Indonesia with a concession area of 1,869 ha, PT Adaro Indonesia with a concession area of 31,380 ha. As well as PT Kideco Jaya Agung with a land area of 47,500 ha. Then PT Berau Coal with a land area of 108,009 ha. (RI)

Tidak hanya itu, Sugeng Suparwoto Ketua Komisi VII DPR juga pernah mengatakan

ada niatan pembatasan lahan jika para pemegang PKP2B diberikan perpanjangan

kontrak.

Kala itu Sugeng menyatakan alasan pembatasan maksimal 15 ribu ha

ditetapkan berdasarkan pengalaman kegiatan tambang masa lalu dimana sudah

diberikan puluhan ribu hektar dan dikelola selama puluhan tahun namun yang benar-

benar digarap tidak maksimal.

“Misalnya, 30 tahun saja dieksploitasi hanya habis 8 ribu hektar, kan fair juga

nanti dalam UU minerba perpanjangan itu diberikan luas wilayahnya 15 ribu hektar,”

kata dia.

Ada tujuh pemegang PKP2B yang memiliki

wilayah tambang sangat luas mencapai ribuan hektar bahkan puluhan ribu dan

sedang mengantri untuk mengajukan pepanjangan kontrak dan mau merubah

kontrak menjadi IUPK yakni PT Arutmin Indonesia dengan luasan lahan mencapai

57.107 hektar (ha). Kemudian PT Kaltim Prima Coal (KPC) seluas 84.938 ha serta PT

Multi Harapan Utama seluas 39.972 ha.

Empat perusahaan lain yang akan segera habis kontraknya yakni PT Kendilo Coal

Indonesia dengan luas lahan konsesi 1.869 ha, PT Adaro Indonesia dengan luas lahan

konsesi 31.380 ha. Serta PT Kideco Jaya Agung dengan luas lahan 47.500 ha.

Kemudian PT Berau Coal dengan luas lahan mencapai 108.009 ha. (RI)

IMA-Daily Update Page 12

The policy of expanding the

mining area in the Minerba RPP, said Arutmin Indonesia

Reporter: Dimas Andi | Editor: Anna Suci Perwitasari

THE GOVERNMENT continues to

deliberate on the Draft Government Regulation (RPP) on the Implementation of

Mineral and Coal (Minerba) Mining Business Activities. One of the important

points in this regulation is government policy that can expand the mining area for

mineral and coal producers.

In article 132, holders of Mining Business

Permits (IUP) and Special Mining Business Permits (IUPK) for metal mineral or coal

production operations activities can apply for expansion of Mining Business Permit

Areas (WIUP) and Special Mining Business Permit Areas (WIUPK) to the Minister.

The expansion of WIUP and WIUPK must

meet a number of criteria, namely the area of the expanded metal mineral WIUP is

determined to be a maximum of 25,000 hectares (ha) while the area of the coal

WIUP resulting from the expansion is determined to be a maximum of 15,000 ha.

The WIUPK area is determined according to the evaluation results of the Minister.

"The area requested for expansion is an

area that coincides with the initial WIUP and WIUPK and the area requested for

expansion has the potential for continuation of mineralization/mineral ore

bodies or coal sedimentation," said the RPP as quoted by Kontan.co.id, Wednesday

(9/9).

Kebijakan perluasan wilayah

tambang di RPP Minerba, ini kata Arutmin Indonesia

Reporter: Dimas Andi | Editor: Anna Suci Perwitasari

PEMERINTAH terus menggodok Ran-

cangan Peraturan Pemerintah (RPP) tentang Pelaksanaan Kegiatan Usaha Pertambangan Mineral dan Batubara (Minerba). Salah satu poin penting dalam beleid ini adalah kebijakan pemerintah yang dapat memperluas luas tambang produsen minerba.

Dalam pasal 132, pemegang Izin Usaha Pertambangan (IUP) dan Izin Usaha Pertambangan Khusus (IUPK) untuk tahap kegiatan operasi produksi mineral logam atau batubara dapat mengajukan per-mohonan perluasan Wilayah Izin Usaha Pertambangan (WIUP) dan Wilayah Izin Usaha Pertambangan Khusus (WIUPK) kepada Menteri.

Perluasan WIUP dan WIUPK harus me-

menuhi sejumlah kriteria, yakni luas WIUP mineral logam hasil perluasan ditentukan

maksimal 25.000 hektare (ha) sedangkan luas WIUP batubara hasil perluasan

ditentukan maksimal 15.000 ha. Adapun luas WIUPK ditentukan sesuai dengan hasil

evaluasi Menteri.

“Wilayah yang dimohonkan perluasan

merupakan wilayah yang berhimpit dengan WIUP dan WIUPK awal dan

wilayah yang dimohonkan perluasan ter-dapat potensi kemenerusan mineralisasi/

tubuh bijih mineral atau sedimentasi batubara,” ungkap RPP tersebut yang

dikutip Kontan.co.id, Rabu (9/9).

IMA-Daily Update Page 13

Still in the same article in paragraph (3), applications for the expansion of WIUP and WIUPK must meet requirements such as maps and coordinate boundaries of the proposed area, work plans for the proposed expansion area, final exploration reports and/or further exploration reports, and a statement of commitment. pay compensation for data information stipulated by the Minister.

General Manager of Legal & External Affairs of PT Arutmin Indonesia, Ezra Sibarani, assessed that the effectiveness of expanding the mine area basically depends on the nature of the commodity products produced by a company. Mineral and coal producers will also consider their business needs before deciding whether to apply for regional expansion or not.

"Due to the different distribution of the coal layers, there are companies that need area expansion," he added, Wednesday (9/9).

Ezra also said that the expansion of the mining area could also help companies to conserve mineral and coal reserves. If it can be maximized down to the production stage, this will ultimately have a positive impact on state revenues.

For information, in Article 134 RPP Minerba, there are several things that the Minister must consider in granting approval for the expansion of WIUP or WIUPK. In addition to the evaluation results of the required documents as stated in Article 132 paragraph (3), the Minister must also consider mineral and coal conservation and increase state revenue.

Furthermore, the government actually has the authority to shrink the mining areas for mineral and coal producers.

Article 136 states that the WIUP and WIUPK can be partially shrunk based on...

Masih di pasal yang sama di ayat (3), permohonan perluasan WIUP dan WIUPK harus memenuhi syarat seperti peta dan batas koordinat wilayah yang diusulkan, rencana kerja pada wilayah perluasan yang diusulkan, laporan eksplorasi akhir dan/atau laporan eksplorasi lanjutan, dan surat pernyataan kesanggupan membayar kompensasi data informasi yang ditetapkan oleh Menteri.

General Manager Legal & External Affairs PT Arutmin Indonesia Ezra Sibarani menilai, efektivitas perluasan wilayah tambang pada dasarnya memang tergantung dari sifat produk komoditas yang dihasilkan oleh suatu perusahaan. Produsen minerba pun akan sangat mempertimbangkan kebutuhan usaha-nya sebelum memutuskan untuk mengajukan permohonan perluasan wilayah atau tidak.

“Karena berbeda-beda sebaran lapisan batu-baranya, jadi ada perusahaan yang me-merlukan perluasan wilayah,” imbuh dia, Rabu (9/9).

Ezra juga menyebut, perluasan wilayah tambang juga bisa membantu perusahaan dalam rangka konservasi cadangan minerba. Jika bisa dimaksimalkan hingga ke tahap produksi, hal ini ujung-ujungnya akan ber-dampak positif bagi penerimaan negara.

Sebagai informasi, dalam Pasal 134 RPP Minerba, ada beberapa hal yang harus dipertimbangkan Menteri dalam memberikan persetujuan perluasan WIUP atau WIUPK. Selain hasil evaluasi terhadap dokumen persyaratan sebagaimana yang tertera di Pasal 132 ayat (3), Menteri juga harus mem-pertimbangkan konservasi minerba, dan peningkatan penerimaan negara.

Lebih lanjut, pemerintah sebenarnya juga berwenang untuk menciutkan wilayah tambang produsen minerba.

Dalam pasal 136 disebut bahwa WIUP dan WIUPK dapat dilakukan penciutan sebagian wilayah berdasarkan...

IMA-Daily Update Page 14

(a) the application submitted by the IUP and IUPK holder to the Minister or (b) the evaluation result of the Minister in accordance with the provisions of the legislation.

In addition, WIUP and WIUPK can be returned entirely based on the request of the IUP and IUPK holder to the Minister.

A partial reduction of the WIUP and WIUPK areas based on the evaluation results of the Minister may be carried out on IUP and IUPK at the exploration activity stage which propose to increase the production operation stage.

(a) permohonan yang diajukan oleh peme-gang IUP dan IUPK kepada Menteri atau (b) hasil evaluasi Menteri sesuai dengan ketentuan peraturan perundang-undangan.

Selain itu, WIUP dan WIUPK dapat di-kembalikan seluruhnya berdasarkan per-mohonan pemegang IUP dan IUPK kepada Menteri.

Penciutan sebagian wilayah WIUP dan WIUPK berdasarkan hasil evaluasi Menteri dapat dilakukan terhadap IUP dan IUPK tahap kegiatan eksplorasi yang mengajukan peningkatan tahap kegiatan operasi produksi.

RPP Minerba is being discussed, this said Bumi Resources Group

(BUMI) Reporter: Dimas Andi | Editor: Anna Suci

Perwitasari

AFTER the issuance of Law no. 3 of 2020 or

the latest Minerba Law, the government is speeding up in finalizing the Draft Govern-ment Regulation (RPP) on the Imple-mentation of Coal Mining Business Activities.

Based on a copy of the PP Minerba draft received by Kontan.co.id, this regulation contains the procedures for mining permits and the expansion and contraction of mining areas. Not only that, the draft regulation will regulate a number of new burdens for mineral and coal producers. For example, levies on mineral and coal reserve resilience funds.

There is also a post-mining reclamation obligation with a 100% success rate for holders of Contract of Work (KK) and Coal Mining Concession Contracts (PKP2B) who receive contract extensions in the form of Special Mining Business Permits (IUPK).

RPP Minerba sedang digodok, ini kata Grup Bumi Resources

(BUMI) Reporter: Dimas Andi | Editor: Anna Suci

Perwitasari

PASCA penerbitan Undang-Undang No. 3 Tahun 2020 atau UU Minerba terbaru, peme-rintah ngebut dalam merampungkan Ran-cangan Peraturan Pemerintah (RPP) tentang Pelaksanaan Kegiatan Usaha Pertambangan Batubara.

Berdasarkan salinan draf PP Minerba yang diterima Kontan.co.id, aturan ini berisi tata cara perizinan minerba beserta perluasan dan penciutan wilayah tambang. Tak hanya itu, draf aturan ini akan mengatur sejumlah beban baru bagi produsen minerba. Misalnya pungutan dana ketahanan cadangan minerba.

Ada pula kewajiban reklamasi pasca tambang dengan tingkat keberhasilan 100% bagi pemegang Kontrak Karya (KK) dan Perjanjian Kontrak Pengusahaan Pertambangan Batu-bara (PKP2B) yang mendapat perpanjangan kontrak dalam bentuk Izin Usaha Pertam-bangan Khusus (IUPK).

IMA-Daily Update Page 15

Director and Corporate Secretary of PT Bumi Resources Tbk (BUMI) Dileep Srivastava assessed that the existence of a PP which specifically discusses the implementation of mineral and coal mining activities will bring a positive atmosphere to the country's coal mining industry.

BUMI also chose to wait for a firm and official final decision from the government regarding the extension of the PKP2B contract in the form of IUPK for two of its subsidiaries, PT Arutmin Indonesia and PT Kaltim Prima Coal (KPC). "Hopefully our contract will be extended soon," added Dileep, Wednesday (9/9).

Unfortunately, he is stil l reluctant to comment further regarding the crucial points in the Minerba RPP. The reason is, the regulation is basically still being discussed in the government domain. "For the time being, for us it is best not to speculate," he continued.

Contacted separately, Ezra Sibarani, General Manager of Legal & External Affairs Arutmin Indonesia admitted that Arutmin's PKP2B permit extension process actually used the old Minerba Law or Law No. 4 of 2009 and its derivative regulations, namely PP. 77 of 2014 concerning the Implementation of Mineral and Coal Mining Business Activities.

He himself has not been able to inform the progress of the Arutmin Indonesia PKP2B permit extension application process. "We can not comment on this now," he said, today.

In the previous news, Ezra had hoped that Arutmin Indonesia could obtain certainty on the extension of the PKP2B permit at the end of August 2020. At that time, he said that the extension of the permit was still in the evaluation process with the Directorate General of Mineral and Coal at the Ministry of EMR.

Direktur dan Sekretaris Perusahaan PT Bumi Resources Tbk (BUMI) Dileep Srivastava menilai, keberadaan PP yang khusus membahas pelaksanaan kegiatan pertambangan minerba akan membawa suasana yang positif bagi industri tambang batubara tanah air.

BUMI pun memilih menunggu keputusan akhir yang tegas dan resmi dari pemerintah terkait perpanjangan kontrak PKP2B dalam bentuk IUPK bagi dua anak usahanya, PT Arutmin Indonesia dan PT Kaltim Prima Coal (KPC). “Semoga segera diperpanjang kontrak kami,” imbuh Dileep, Rabu (9/9).

Sayangnya, ia masih enggan berkomentar lebih jauh terkait poin-poin krusial di dalam RPP Minerba tersebut. Pasalnya, beleid tersebut pada dasarnya masih dalam tahap pembahasan di ranah pemerintah. “Untuk sementara waktu, bagi kami yang terbaik adalah tidak ber-spekulasi,” sambung dia.

Dihubungi terpisah, Ezra Sibarani, General Manager Legal & External Affairs Arutmin Indonesia mengaku, proses perpanjangan izin PKP2B Arutmin sebenarnya meng-gunakan UU Minerba yang lama atau UU No. 4 Tahun 2009 beserta peraturan turunannya yaitu PP No. 77 Tahun 2014 tentang Pelaksanaan Kegiatan Usaha Pertambangan Minerba.

Dia sendiri belum dapat menginformasikan perkembangan proses pengajuan per-panjangan izin PKP2B Arutmin Indonesia. “Kami belum dapat berkomentar mengenai hal ini sekarang,” ujarnya, hari ini.

Dalam berita sebelumnya, Ezra sempat berharap Arutmin Indonesia bisa men-dapat kepastian perpanjangan izin PKP2B pada akhir Agustus 2020. Kala itu, ia menyebut bahwa perpanjangan izin ter-sebut masih dalam proses evaluasi dengan Ditjen Minerba Kementerian ESDM.

IMA-Daily Update Page 16

During the Hearing Meeting (RDP) with the

Indonesian Parliament on Thursday (27/8),

the Director General of Mineral and Coal of

the Ministry of EMR Ridwan Djamaludin

explained that his party had evaluated the

application documents and the performance

of Arutmin Indonesia. This company is also

considered to have a good performance

based on this evaluation.

The Directorate General of Mineral and Coal

is still conducting the evaluation process for

the Whole Area Development Plan (RPSW).

Just for the record, the validity period of

Arutmin Indonesia's PKP2B will end on

November 1, 2020. KPC's PKP2B permit will

expire on December 31, 2021. Both Arutmin

Indonesia and KPC have submitted their

respective permit extensions in October

2019 and March 2020.

Saat Rapat Dengar Pendapat (RDP)

bersama DPR RI pada Kamis (27/8) lalu,

Direktur Jenderal Minerba Kementerian

ESDM Ridwan Djamaludin memaparkan,

pihaknya sudah mengevaluasi dokumen

permohonan dan kinerja Arutmin

Indonesia. Perusahaan ini pun dinilai punya

kinerja baik berdasarkan evaluasi terebut.

Ditjen Minerba pun masih melakukan

proses evaluasi Rencana Pengembangan

Seluruh Wilayah (RPSW).

Sekadar catatan, masa berlaku PKP2B

Arutmin Indonesia akan berakhir pada 1

November 2020 nanti. Adapun izin PKP2B

milik KPC akan kadaluarsa pada 31

Desember 2021 mendatang. Baik Arutmin

Indonesia maupun KPC sudah mengajukan

perpanjangan izin masing-masing pada

Oktober 2019 dan Maret 2020.

RPP Minerba: BUMN Can Transfer WIUP Maximum 49%

Wilda Asmarini, CNBC Indonesia

APART from obtaining privileges in the

mining production operation period, State

Owned Enterprises (BUMN) are also allowed to transfer part of the Mining

Business License Area (WIUP) to other business entities but must still have 51%

or more share ownership in the IUP.

This can be seen from the document of the

Draft Government Regulation on Mineral

and Coal Mining Business Activities

obtained by CNBC Indonesia.

RPP Minerba: BUMN Dapat Alihkan WIUP Maksimal 49%

Wilda Asmarini, CNBC Indonesia

SELAIN memperoleh keistimewaan dalam

jangka waktu operasi produksi tambang, Badan Usaha Milik Negara (BUMN) juga diperbolehkan mengalihkan sebagian Wilayah Izin Usaha Pertambangan (WIUP) kepada badan usaha lain namun tetap harus memiliki kepimilikan saham sebesar 51% atau lebih pada IUP tersebut.

Hal tersebut terlihat dari dokumen Rancangan Peraturan Pemerintah tentang Kegiatan Usaha Pertambangan Mineral dan Batu Bara yang diperoleh CNBC Indonesia.

IMA-Daily Update Page 17

In Article 14 in the RPP it is written that "IUPs owned by BUMN, part of WIUP in the production operation activity phase can be transferred to other business entities whose shares are 51% or more owned by BUMN holding IUP whose WIUP will be transferred."

Then, the transfer of part of the WIUP in the production operation activity stage is carried out after obtaining approval from the Minister.

Regarding the transfer of IUP has been stated in the previous article, namely Article 12. In this article, it is stated that "IUP holders are prohibited from transferring IUP to other parties without the approval of the Minister."

This article can be interpreted as saying that IUP can be transferred to another company as long as the Minister gives approval.

Then it is stated that the Minister's approval can be given after the IUP holder meets the requirements at least:

a. has completed the exploration phase as proven by the availability of data on resources and reserves,

b. comply with administrative, technical, environmental and financial requirements,

c. submit documents related to other parties that will receive the IUP transfer.

The administrative requirements cover at least:

a. application letter,

b. the number of attempts in the event of an update,

c. composition of management, list of shareholders, and list of beneficial owners of the business entity.

While the technical requirements include at least:

Pada Pasal 14 dalam RPP tertulis bahwa "IUP yang dimiliki oleh BUMN sebagian WIUP tahap kegiatan operasi produksinya dapat dialihkan kepada badan usaha lain yang 51% atau lebih kepemilikan saham-nya dimiliki oleh BUMN pemegang IUP yang WIUP-nya akan dialihkan."

Lalu, pengalihan sebagian WIUP tahap kegiatan operasi produksi tersebut dilaku-kan setelah mendapatkan persetujuan Menteri.

Perihal pengalihan IUP telah dicantumkan pada pasal sebelumnya, yakni Pasal 12. Pada pasal ini disebutkan bahwa "peme-gang IUP dilarang memindahtangankan IUP kepada pihak lain tanpa persetujuan dari Menteri."

Pasal ini bisa saja dimaknai bahwa IUP bisa dipindahtangankan ke perusahaan lain selama Menteri memberikan persetujuan.

Lalu disebutkan bahwa persetujuan Menteri dapat diberikan setelah pemegang IUP memenuhi persyaratan paling sedikit:

a. telah selesai melakukan kegiatan tahap eksplorasi yang dibuktikan dengan keter-sediaan data sumber daya dan cadangan,

b. memenuhi persyaratan administratif, teknis, lingkungan,dan finansial,

c. menyampaikan dokumen terkait pihak lain yang akan menerima pengalihan IUP.

Adapun persyaratan administratif paling sedikit meliputi:

a. surat permohonan,

b. nomor induk berusaha dalam hal terjadi pemutakhiran,

c. susunan pengurus, daftar pemegang saham, dan daftar pemilik manfaat dari badan usaha.

Sementara persyaratan teknis paling sedikit meliputi:

IMA-Daily Update Page 18

a. exploration final report,

b. data and resource and backup state-ments.

For environmental requirements, at least include:

a. reports on the implementation of reclamation activities at the stage of exploration activities,

b. proof of placement of reclamation guarantee.

Financial requirements include at least:

a. last year's financial statements that have been audited by a public accountant,

b. proof of submission of Annual Corporate Income Tax Returns for the last 2 years,

c. proof of payment of fixed contributions for the last 3 years. (wia)

a. laporan akhir eksplorasi,

b. data dan pernyataan sumber daya dan cadangan.

Untuk persyaratan lingkungan, paling sedikit meliputi:

a. laporan pelaksanaan kegiatan reklamasi pada tahap kegiatan eksplorasi,

b. bukti penempatan jaminan reklamasi.

Persyaratan finansial paling sedikit meliputi:

a. laporan keuangan tahun terakhir yang telah di audit oleh akuntan publik,

b. bukti penyampaian Surat Pemberi-tahuan Tahunan Pajak Penghasilan badan selama 2 tahun terakhir,

c. bukti pembayaran iuran tetap 3 tahun terakhir. (wia)

PP Minerba will emphasize the obligation of minerba reserve and

mine reclamation fund Reporter: Dimas Andi | Editor: Noverius

Laoli

THE GOVERNMENT is trying to realize

the Draft Government Regulation (RPP) on the Implementation of Mineral and Coal (Minerba) Mining Business Activities.

This regulation is one of the derivative regulations from Law Number 3 of 2020 or the latest Minerba Law which was recently published.

Based on a copy of the draft Minerba RPP received by Kontan, this regulation not only contains the procedures for mining permits, but also regulates a number of new burdens that must be borne by mineral and coal producing companies.

PP minerba bakal tekankan kewajiban dana cadangan

minerba dan reklamasi tambang Reporter: Dimas Andi | Editor: Noverius

Laoli

PEMERINTAH tengah berupaya merealisasi-kan Rancangan Peraturan Pemerintah (RPP) tentang Pelaksanaan Kegiatan Usaha Pertam-bangan Mineral dan Batubara (Minerba).

Beleid ini menjadi salah satu peraturan turunan dari Undang-Undang Nomor 3 Tahun 2020 atau UU Minerba terbaru yang belum lama terbit.

Berdasarkan salinan draf RPP Minerba yang diterima Kontan, aturan ini tak hanya berisi tata cara perizinan minerba, melainkan juga mengatur sejumlah beban baru yang mesti diemban perusahaan produsen minerba.

IMA-Daily Update Page 19

In Article 98, it is written that the holder of a Special Mining Business License (IUPK) is required to provide mineral and coal reserve resilience funds. The funds are used to carry out further exploration activities.

The amount of mineral and coal reserve resilience fund is proposed in the annual Work Plan and Budget (RKAB). "Further provisions regarding the resilience of mineral and coal reserves are regulated by a Ministerial Regulation," said the RPP as quoted by Kontan, Wednesday (9/9).

Mineral and coal producers, especially holders of Contract of Work (KK) or Coal Mining Concession Contract (PKP2B) who have received a contract extension in the form of IUPK, are now also required to be more active in reclamation or post-mining activities. This is explained in Article 110 of the Minerba RPP.

In paragraph (1), the contract/agreement area stipulated in the approval of the plan for the entire area becomes the basis for the Minister to grant an IUPK as a continuation of the contract/agreement operation.

Then in paragraph (2), holders of KK or PKP2B are obliged to carry out reclamation and/or post-mining of the contract/agree-ment areas that are not accommodated in the approval of the entire area development plan as referred to in paragraph (1).

Mineral and coal mining companies are also required to carry out reclamation and/or post-mining with a success rate of 100% during the IUPK implementation period as a continuation of contract/ agreement operations.

Not only that, in carrying out reclamation and/or post-mining, IUPK holders as a continuation of contract/agreement operations are required to comply with the provisions on the placement of reclamation guarantees and/or post-mining guarantees in accordance with statutory provisions.

Dalam Pasal 98, tertulis bahwa pemegang Izin Usaha Pertambangan Khusus (IUPK) wajib menyediakan dana ketahanan cadangan minerba. Dana tersebut digunakan untuk melakukan kegiatan eksplorasi lanjutan.

Adapun besaran dana ketahanan cadangan minerba diusulkan dalam Rencana Kerja dan Anggaran Biaya (RKAB) tahunan. “Ketentuan lebih lanjut mengenai ketahanan cadangan mineral dan batubara diatur dengan Peraturan Menteri,” jelas RPP tersebut yang dikutip Kontan, Rabu (9/9).

Produsen minerba, khususnya pemegang Kontrak Karya (KK) atau Perjanjian Kontrak Pengusahaan Pertambangan Batubara (PKP2B) yang mendapat perpanjangan kontrak dalam bentuk IUPK, kini juga dituntut untuk lebih aktif dalam kegiatan reklamasi atau pascatambang. Hal ini di-jelaskan di RPP Minerba Pasal 110.

Di ayat (1), wilayah kontrak/perjanjian yang ditetapkan dalam persetujuan atas rencana seluruh wilayah menjadi dasar bagi Menteri dalam pemberian IUPK sebagai kelanjutan operasi kontrak/perjanjian.

Kemudian di ayat (2), pemegang KK atau PKP2B wajib melakukan reklamasi dan/atau pascatambang atas wilayah kontrak/ perjanjian yang tidak terakomodir dalam persetujuan atas rencana pengembangan seluruh wilayah sebagaimana dimaksud pada ayat (1).

Perusahaan tambang minerba juga wajib melakukan reklamasi dan/atau pasca-tambang dengan tingkat keberhasilan 100% pada masa pelaksanaan IUPK sebagai kelanjutan operasi kontrak/perjanjian.

Tak hanya itu, dalam melaksanakan rekla-masi dan/atau pascatambang, pemegang IUPK sebagai kelanjutan operasi kontrak/ perjanjian wajib memenuhi ketentuan penempatan jaminan reklamasi dan/atau jaminan pascatambang sesuai ketentuan peraturan perundang-undangan.

IMA-Daily Update Page 20

The price of coal 'rises from the grave', does it last long?

Tirta Citradi, CNBC Indonesia

THE NEWCASTLE thermal benchmark

coal price shot as if it had risen from its grave in yesterday's trading. However, this strengthening must be watched out for due to the weak demand for coal from various consumer countries.

Wednesday (9/9/2020), the price of coal for actively traded contracts shot up 2.17% to US$ 51.9/ton. In the last two days, coal prices have strengthened 4% from their lowest level in September at US$ 49.9/ton.

Demand for coal in the Asian region is still low. Reuters reports, in the last eight months, total imports of seaborne coal were recorded at 612.82 million tons, down 7.1% over the same period last year.

The drop in coal import volume in Asia was triggered by lower import demand from India and South Korea, which are the four largest coal consuming countries in Asia.

In the last eight months, China's coal imports have only fallen 0.2% (yoy). This is much different from Indian coal imports which fell by 18.4% (yoy) in the same period.

During January-August, India imported 113.48 million tonnes of coal or 25.6 million tonnes lower than the same period last year, citing Reuters.

Even though India's coal imports improved in July and August at 12.7 million tonnes and 12.8 million tonnes, these volumes are still lower than before the lockdown, which reached 18 million tonnes.

Harga Batu Bara 'Bangkit dari Kubur', Bertahan Lama Gak Nih?

Tirta Citradi, CNBC Indonesia

HARGA batu bara acuan termal Newcastle

melesat seolah bangkit dari kubur pada perdagangan kemarin. Namun penguatan ini harus diwaspadai karena permintaan batu bara yang masih lemah dari berbagai negara konsumennya.

Rabu (9/9/2020), harga batubara utk kontrak yang aktif diperdagangkan melesat 2,17% ke US$ 51,9/ton. Dalam dua hari terakhir harga batubara telah menguat 4% dari level terendah-nya di bulan September di US$ 49,9/ton.

Permintaan batu bara di kawasan Asia masih rendah. Reuters melaporkan, dalam kurun waktu delapan bulan terakhir, total impor batu bara lintas laut (seaborne) tercatat mencapai 612,82 juta ton atau turun 7,1% dibanding periode yang sama tahun lalu.

Anjloknya volume impor batu bara Asia dipicu oleh turunnya permintaan impor dari India dan Korea Selatan yang menjadi empat negara konsumen batu bara terbesar di Asia.

Dalam kurun waktu delapan bulan terakhir, impor batu bara China hanya turun 0,2% (yoy). Hal ini jauh berbeda dengan impor batu bara India yang turun hingga 18,4% (yoy) pada periode yang sama.

Selama Januari-Agustus, India mengimpor 113,48 juta ton batu bara atau 25,6 juta ton lebih rendah dibanding periode yang sama tahun lalu, mengutip Reuters.

Meksipun impor batu bara India membaik pada Juli dan Agustus di angka 12,7 juta ton dan 12,8 juta ton, volume ini masih lebih rendah dibanding masa sebelum lockdown yang mencapai 18 juta ton.

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The national lockdown that Indi a implemented to suppress the transmission of Covid-19 made the country's economy contract deeply. The demand for and consumption of electricity for the industrial and commercial sectors decreased as factories and shopping centers closed.

Apart from India, imports from South Korea also dropped 21% to 71.01 million tonnes in the last eight months from the same period last year.

The weak demand for coal in the Asian region was reflected in lower prices for thermal coal used for power generation and coking coal used for steel making.

The question for exporters is whether they believe that China will change its unofficial policies and allow more imports, and whether they think the Indian economy and electricity demand will recover strongly in the coming months.

If these drivers were not present, it would be difficult to predict an increase in prices, which are already at levels that would cost many producers a loss. CNBC INDONESIA

RESEARCH TEAM (twg/twg)

Lockdown secara nasional yang diterapkan India untuk menekan penularan Covid-19 membuat ekonomi negara tersebut ter-kontraksi dalam. Permintaan dan konsumsi listrik untuk sektor industri dan komersial menurun seiring dengan tutupnya pabrik serta pusat perbelanjaan.

Selain India, impor dari Korea Selatan juga drop 21% menjadi 71,01 juta ton dalam delapan bulan terakhir dari periode yang sama tahun lalu.

Lemahnya permintaan batu bara di kawasan Asia ini tercermin dari penurunan harga batu bara termal yang digunakan untuk pembangkit listrik serta batu bara kokas yang digunakan untuk pembuatan baja.

Pertanyaan bagi eksportir adalah apakah mereka yakin bahwa China akan mengubah kebijakan tidak resminya dan mengizinkan lebih banyak impor, dan apakah menurut mereka ekonomi India, dan permintaan listrik akan pulih dengan kuat dalam bebe-rapa bulan mendatang.

Jika pendorong ini tidak ada, akan sulit untuk memperkirakan kenaikan harga, yang sudah berada pada tingkat yang akan mem-buat banyak produsen mengalami kerugian. TIM RISET CNBC INDONESIA (twg/twg)

Race is on for Indonesia’s untapped rare earths Tin mining tailings could contain commercial quantities of rare earths both US and China

would be keen to tap

By John McBeth

RARE earth, the experts like to say, is neither rare nor is it earth. But given its use in everything from smartphones to high-tech aerospace and defense systems, a potential buried treasure from the past may soon become the next big thing in Indonesian mining.

Indonesia appears to have only modest proven amounts of the v valuable minerals, but much of what it does have is locked away in the rock waste, or tailings, left over from centuries of tin mining on the islands of Bangka and Belitung, south of Singapore.

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Although preliminary studies show state-owned PT Tambang Timah’s tin sands contain 13 of the 17 chemical elements in the periodic table present in rare earths, it will take further investigation to determine whether it is present in commercial quantities.

If it is, that would make Indonesia a player in an industry that is fast becoming a new trade war flashpoint between the United States and China because of its strategic significance for numerous civilian and military technologies, including both laser and precision-guided missiles.

China currently controls 80% of the world’s trade in rare earths and could conceivably block US access in retaliation for any future Washington sanctions on Chinese-made goods.

With proven reserves of 327,500 tons, Timah still produces about 30,000 tons of tin a year from an offshore-onshore concession covering 512,369 hectares; other private firms add 40,000 tons, making Indonesia the world’s largest tin producer.

Rare earths also occur in Aceh, Jambi and Riau’s Singkep Island and in West Kalimantan, where they are associated with rich deposits of bauxite, the feedstock for a US$695 million alumina smelter the Chinese are building north of Pontianak, the province capital.

Historically, most rare earths have been produced as by-products from tin, copper and gold mining, but were not considered worth processing and have invariably ended up in stockpiles, as is the case with Tambang Timah.

With the US distracted by internal problems, the only outside interest so far in Indonesia’s potential has inevitably come from China, which has 55 million tonnes of rare earth reserves, by far the largest in the world.

But in looking for investors elsewhere, such as the US and Australia, the government is anxious to develop domestic expertise in the complex seven-stage process of refining monazite and xenotime, the two minerals that house REE elements.

Where the US may have an edge over China is in handling radioactive thorium, which is released in the course of the processing and must be treated with extreme care, even if it doesn’t produce uranium’s dangerous gamma rays.

Laboratory results indicate Timah’s tailings contain significant quantities of neodymium and praseodymium, which in combination with iron and boron are used to produce high-power magnets for electric motors and military guidance and control systems.

Indonesia already possesses 80% of the minerals, rare earths included, needed to manufacture lithium batteries, part of the government’s policy of venturing into electric vehicles as a way of creating a future industrial base built around its vast natural resources.

Neodymium is responsible for most rare earth demand, with a market value of $11.3 billion in 2017. Demand is currently outstripping supply by about 2-3,000 tons a year, but that gap will widen as more lithium battery-powered electric vehicles appear on the world’s roads.

Future prospects depend on the government enacting policy and regulation and in initiating incentives for downstream and upstream industry, according to Fadli Rahman, co-author of a 2014 Colorado School of Mines paper on Indonesia’s rare earth potential.

“If the Indonesian government remains passive and unassertive to the viable options, the rare earths will merely remain rare to Indonesians for the foreseeable future,” said Rahman, now state oil company Pertamina’s youngest commissioner.

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With estimated reserves of only 13 million tons, the US is waking up to the fact that China’s domination of the increasingly strategic material leaves it vulnerable.

At one point, neodymium was even on the Donald Trump administration’s list of tariffs it placed on Chinese imports in 2018 before it was quietly removed, an indication of how important it has become to the US economy.

Last year, China threatened to strengthen controls on rare earth exports to the US, one of the reasons why Washington recently formalized an existing partnership with Australia to develop new sources of critical minerals, including rare earth, cobalt and tungsten.

Australia, with 2.1 million tons, is one of a handful of countries possessing significant rare earth reserves. Others include Brazil (22 million tons), Russia (19 million), Vietnam (11 million) and India (3.1 million).

Vietnam, whose rare earth concentrations are along its northwestern border with China and the South China Sea coast, is reportedly keen on using two relatively common elements, cerium and lanthanum, to develop a clean energy capacity.

The US began mining rare earth at southern California’s Mountain Pass mine in the 1960s, but since 2010 China has become the dominant player, producing 100,000 tons a year compared with the US output of 43,000 tons over the past two decades.

An open-pit mine close to the Nevada border known as Mountain Pass was recently saved from a second bankruptcy by MP Materials, a company owned by a Chicago hedge fund. It remains the only rare earth mining and processing facility in the US.

Most rare earth projects have proven to be uneconomic because of mining costs which can contribute 25-39% of the total expenditure for extracting from hard rock deposits. But Bangka-Belitung’s Monazite has the advantage of being in sand form and therefore does not require crushing and grinding.

In the end, thorium and how to deal with it remains a major impediment to the development of monazite deposits.

Indonesian nuclear advocate Bob Effendi, the local representative for American nuclear reactor design company ThorCon, asserts that safety concerns around the stockpiling of the radioactive waste is a “non-issue.”

But local geologists say it will need to be contained in stainless steel casks and stored in reinforced concrete buildings, possibly on a small uninhabited island, until such time as it is needed as fuel for a long-planned nuclear power station.

For decades now, part of the International Atomic Energy Agency’s (IAEA) mission has been to simply monitor the volume of monazite in Tambang Timah’s tailings, as it has done with similar mine waste around the world.

In the meantime, nuclear power remains on Indonesia’s agenda, initially set down in a 2007 long-term national development planning law that envisaged an operating plant by 2024.

In 2014, the Ministry of Mines and Energy regulation listed nuclear in the same category as other sources of renewable energy, but with the proviso that it should only be considered as a final option.

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A second ministerial regulation in 2019 called for the drawing up of a concrete plan for the construction of a nuclear power station, followed by a presidential regulation earlier this year which listed it as a priority program for advanced studies.

Bangka-Belitung governor Erzaldi Rosman Djohan sent a letter to the Coordinating Ministry of Maritime Resources and Investment on August 3 supporting the construction of the nuclear plant in the southern Sumatran province.

But the Indonesian citizenry may first have to get over their innate fear of nuclear power, which has so far stymied plans going back to the New Order era for a station to be built on the Muria Peninsula in heavily-populated Central Java.

A member of President Joko Widodo’s National Economic and Industry Committee (KEIN), Effendi argues that a thorium-fuelled plant is not only immune to meltdown but is cheaper to build and produces less waste.

The former oilman also challenges the widely-held perception that Indonesia has limitless sources of energy, noting that coal and gas reserves are not finite and claiming that solar and wind potential is only 15% of what it is claimed to be.

Indonesians are not alone in their fear of anything nuclear-related. In Malaysia, the government faces public opposition to the Lynas Corporation’s facility near Kuantan, which processes rare earth oxides shipped from its Mt Weld concentration plant in West Australia.

With more low-level radioactive waste piling up at the plant, and the issue heading for Malaysia’s High Court, Lynas has now been forced to move the cracking and leeching part of the process to the outback mining center of Kalgoorlie-Boulder.

Zinc price to enter long term structural decline in 2021 – report MINING.com Editor

ZINC prices will edge higher over the remainder of 2020, continuing a strong rebound from the lows posted during the initial covid-19 outbreak, according to Fitch Solutions’ latest industry report.

Zinc prices fell by 17.3% over the first three months of 2020, but have since recovered to post new highs for the year.

Three-month zinc price averaged $2,121/tonne over the first eight months of 2020 and Fitch has revised its forecast for 2020 as a whole, up from $2,100/tonne to $2,200/tonne.

Fitch says this implies prices will rise to around $2,600/tonne by the end of the year.

Fitch has turned more positive on zinc prices over the near term due to a stronger-than-expected rebound in economic activity in China since Q12020.

The analysts maintain revised 2020 real GDP growth forecast of 2.2% (from 1.1% previously), with high frequency data affirming Fitch’s view for economic activity to recover more quickly than anticipated.

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Fitch expects a V-shaped recovery for China, as Beijing is likely to increase policy support if the recovery loses steam. China accounted for just less than half of global zinc consumption in

2019.

Longer term downtrend

Government economic stimulus in China will continue to underpin a strong rebound in steel production and zinc demand that will persist into 2021, Fitch forecasts.

Economic stimulus measures announced at the China National People’s Congress meeting in May amounted to around 7.5% of annual GDP. While smaller than both the 12.5% of GDP

package implemented during the Global Financial Crisis and the spending implemented by several other countries including the US and Singapore (around 20% of GDP), Fitch says these

measures should boost demand for steel from key sectors such as construction and manufacturing over the remainder of 2020 and into 2021.

Fitch expects a long-term

structural downtrend in zinc prices, forecasted to

begin in 2021.

Although Fitch revised up its price forecasts, the

market analyst expects prices to peak in 2020-21

and for market over-supply to drag prices

down thereafter. This structural decline will be

driven by sluggish growth in global steel production,

as galvanising steel is the primary use of zinc.

Fitch forecasts that after a rebound in 2021, annual steel production growth will steadily slow down in the coming years

due to declining capacity increases in China and Europe. In China, escalating environmental restrictions on producers and weakening demand growth from the construction sector will

cap steel production growth rates, Fitch says, while European producers will cut production in the face of low steel prices.

Given this weakening backdrop, Fitch forecasts global zinc consumption growth to slow from

an average of 2.2% y-o-y over 2010-2019 to an average of 1.1% y-o-y over 2020-2029. The slowdown in consumption growth will keep the market in surplus over the coming years,

Fitch says.

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Newcrest taps into molybdenum at Cadia Salomae Haselgrove

NEWCREST Mining plans to begin the commissioning of a flotation plant at its molybdenum

outpost project at the Cadia mine in New South Wales this year.

The company will extract molybdenum from its copper concentrate stream to produce a 50 per cent molybdenum concentrate in dry powder form.

The project will cost an estimated $130 million to complete and is anticipated to produce 4.1 million pounds of molybdenum a year.

This would see 140 people employed at the site during construction and create 15 full time roles when operational in June next year.

The flotation plant, affectionately dubbed by Newcrest as the “Moly Plant”, will provide the company with a level of control and automation to optimise recoveries and concentrate grades.

Made of a series of flotation cells, thickeners, a grinding mill, dryer, scrubber and bagging plant, the Moly Plant has been designed using the latest 3D modelling software.

This is expected to give Newcrest insights throughout the design process and will offer substantial benefits during construction and commissioning.

Newcrest started constructing the molybdenum processing plant – an Australia-first – this February.

Once completed, the plant will generate an additional revenue stream of $45 million for the company a year.

Moly project manager Malcolm McPhan said Newcrest would make use of the existing pipeline from Cadia to the township of Blayney to extract the molybdenum for processing.

“We divert the copper concentrate from the pipeline on its way to Blayney to the Moly Plant where we extract the molybdenum via a flotation process,” McPhan explained.

“Then we pump it back into that pipeline and send it on its merry way to Blayney.”

AfriTin ramps up August output to over 37 t of tin concentrate By: Marleny Arnoldi, Creamer Media Online Writer

AIM-listed AfriTin Mining has built on production gains made during June and July, with its

production in August increasing to 37.5 t of tin concentrate.

This follows the completion of modifications at the company’s fines dewatering circuit, at the Uis mine’s processing plant, in Namibia, to address bottlenecks.

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The modifications enabled more fines material in the run-of-mine feed, as well as rebalanced materials flows and expanded capacity related to the dewatering of grits and slimes.

These improvements will lead to further increased concentrator plant throughput from September onwards.

During August, four days of maintenance shutdown was necessary to effect the modifications. Nonetheless, the company managed to increase tin concentrate production to 37.5 t, compared with 35.3 t produced in July, 19.7 t produced in June and 11.2 t produced in May.

Year-to-date tin concentrate production totals 150 t, with regular shipments from Walvis Bay having continued despite ongoing Covid-19 restrictions in Namibia and South Africa.

AfriTin is targeting the processing of 45 000 t of ore a month, at a rate of 80 t/h, for the production of 60 t of tin concentrate a month by the end of this year.

With the main bottlenecks addressed, the company will now focus on improving the availability and use of the plant to support the remainder of the production ramp-up.

This includes additional instrumentation and controls, optimisation of piping and valving configurations, refining the density control in the dense medium separation circuits and installing an on-site laboratory.

Running behind schedule: 54 mining projects of Coal India facing delays

STATE-owned Coal India's 54 mining projects are running behind schedule mainly on account of delays in obtaining green nod and issues related to rehabilitation and resettlement. The development assumes significance against the backdrop of Coal India (CIL) eyeing production of 1 billion tonnes by 2023-24.

In its recent report, CIL said that "123 coal projects costing Rs 20 crore and above are in different stages of implementation out of which 69 projects are on schedule and 54 projects are delayed."

The PSU said that major reasons for the delay in implementation of these projects are delay in obtaining forest clearance (FC) and possession of land and issues related to rehabilitation and resettlement.

The coal behemoth said that 18 mining projects with a total rated capacity of 132.04 million tonnes per annum and a total investment of Rs 21,244.55 crores were approved by the board of CIL and its arms during 2019-20.

Nine non-mining projects with a sanctioned capital of Rs 855.52 crore were also approved during the fiscal, it said.

CIL's three mining projects, with a sanctioned capacity of 9.60 million tonnes per year and sanctioned capital of Rs 1,052.57 crore were completed during 2019-20.

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Two coal projects of the PSU with a sanctioned capacity of 4.5 million tonnes per annum and sanctioned capital of Rs 623.99 crore began production in the last fiscal.

Coal India accounts for over 80 per cent of domestic coal output. The PSU is eyeing one billion tonnes of production target by 2023-24.

The state-owned firm will pump in over Rs 1.22 lakh crore on projects related to coal evacuation, exploration and clean coal technologies by FY24, to achieve 1 billion tonnes of fuel output target, Coal Minister Pralhad Joshi had earlier said.

Out of the proposed spend of over Rs 1.22 lakh crore, Coal India has planned to invest Rs 32,696 crore in coal evacuation, Rs 25,117 crore in mine infrastructure and Rs 29,461 crore in project development by 2023-24, the minister had said.

IEEFA: Southeast Asian banks need to reduce coal risks More than 138 major financial institutions have exited coal

AS THE economic crisis linked to COVID-19 grips the world, banks, insurers and asset managers have even more reasons to exit from the riskiest investments in fossil fuels – starting with thermal coal mining and coal power plants. The shift away from excessive reliance on coal power has continued at pace, despite the pandemic, and Southeast and South Asian financial institutions risk getting left behind unless they too move towards the sustainable clean energy industries of the future. Putting aside the climate issues, the economics are increasingly compelling.

CIMB has announced the positive news that it is developing a coal policy – and stated that this coal guideline will be available by the end of this year or early 2021, which will be a first for Malaysian banks. This will position CIMB as a leader on sustainable finance in Southeast Asia, building on its position as the first bank in the region to sign the UN Principles for Responsible Banking. Other Malaysian banks – such as Maybank – should now follow to avoid the clear and increasing climate risks.

THE FINANCIAL RISKS OF CONTINUED INVESTMENT IN NEW COAL HAVE BEEN DEMONSTRATED during the economic crisis this year. Research by IEEFA has shown that more than 138 globally significant financial institutions have already exited from coal, making coal plants harder to finance and a rising stranded asset risk.

The trend continued this year despite COVID-19, with Japanese megabanks Sumitomo (SMBC), Mitsubishi UFJ (MUFG) and Mizuho each announcing an end to new financing for coal plants in April. The moves followed Japan’s first shareholder climate resolution by investors which targeted Mizuho, putting their coal finance in the spotlight. But the most surprising announcement was by Japan Bank for International Cooperation (JBIC), which also committed to ceasing new coal financing in April 2020. In the last five years JBIC has been the largest provider of government-subsidised capital for new coal globally.

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The first half of 2020 marked the first ever six-month decline in global coal power capacity, according to Global Energy Monitor, as well as showing a global collapse in coal power plant utilisation rates to decade lows, according to Ember research. Meanwhile, investments in sustainable funds have remained strong during the coronavirus crisis. Blackrock research shows this is because stronger environmental, social & governance (ESG) performance is a proxy for good management factors such as the long term effectiveness of the company’s board. Certainly, sustainable investments have been more resilient in the current crisis.

THE TREND OF JAPANESE BANKS SHIFTING AWAY FROM COAL FOLLOWS SIMILAR MOVES BY THE SINGAPOREAN BANK LEADERS DBS, OCBC AND UOB in April last year – meaning that by now, most of the largest commercial banks in Asia have already exited from financing new coal power plants. When the first bank announced its policy in Singapore, other domestic peers quickly followed suit. In Malaysia, now that CIMB has announced a coal policy, eyes will be on Maybank and RHB Bank who are still financing coal. Other Southeast Asian banks should not risk ending up as the ‘last ones standing’ with bad debt in risky coal projects.

While the last remaining financiers of coal might potentially be able to charge more for their finance, these projects entail significant capital risk. Project delay risks, reduced competitiveness against lower cost alternatives, reputational risks, cancellations and postponements all mar such projects globally. And most importantly, with South Korea focussing on a Green New Deal and Japan announcing plans to close 100 coal plants last month, both countries’ commitment to providing long dated public Export Credit Agency (ECA) capital support to new coal power plants is rapidly being reassessed. Absent this capital subsidy, private capital risks for new coal escalate dramatically.

In Vietnam for example, nearly half of its currently planned coal capacity could be shelved as alternative sources of energy take up growing shares in its power mix, according to the Power Development Plan which will go into effect early next year.

August 2020 saw Bangladesh’s Energy Minister announce plans to review all but three of the country’s 29 coal power plant developments. And Pakistan faces increasing financial pressures from excessive coal power expansion.

For the Malaysian banks, coal makes up only a small portion of their portfolio. The former CEO of CIMB said it makes up only 1% of CIMB’s portfolio. Maybank, which is the largest Malaysian bank by assets at home, estimates its exposure to coal financing at 0.2% of its total portfolio. This is a small and risky portion of the portfolio that they would do well to move away from. Coal leads to reputational risks and prevents these banks promoting their brand, which is ever more important for stock market valuation.

Yet at the moment, none of the Southeast Asian banks outside Singapore have made a formal commitment to start the shift away from new coal. Hopefully this policy will see CIMB cease financing new coal plants with no exceptions, matching the commitments by its Singaporean peers. These banks must avoid investing in an outdated and increasingly uncompetitive technology which other major global institutions are moving away from.

CONTINUED COAL EXPOSURE MAKES THESE BANKS BECOME LESS ATTRACTIVE TO INTERNATIONAL INVESTORS. Following BlackRock’s landmark “Fundamental Reshaping of Finance” policy announcement in January 2020, an increasing number of influential investors are actively engaging to shift their clients to align with the Paris Agreement, starting with

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coal. Institutional investors holding assets worth $11 trillion have now pledged to divest from fossil fuel assets. This is being driven more by the economics than any moral argument. U.S. oil and gas exploration and production companies have dropped 44% this year. Peabody Energy is down more than 70% and energy stocks now account for 2.3% of the benchmark S&P 500 Index, down from 16% as recently as 12 years ago.

The momentum is building because the costs of renewable energy are continuing to fall rapidly, making clean energy a much more attractive investment proposition. Research by Carbon Tracker found that in Vietnam and Thailand, solar energy would be cheaper than operating coal plants by 2027-8. Given that it can take 4-5 years to build a new coal power plant, this means new coal plants would become uncompetitive by the time of commissioning. In India, record-low solar power tariffs are already half the cost of a new imported coal-fired power plant, and 30% cheaper than existing domestic coal power plants. And renewables are now the low-cost source of new generation in Pakistan as well.

Dispatchable renewable sources combined with energy storage are now being built – which is further undercutting the economics of coal plants. And over half of coal plants operating today cost more to run than building new renewables.

More broadly, energy demand is uncertain as the world enters a recession. The International Energy Agency has projected that power investment this year may fall by 10%, with conventional fossil fuel energy investments hit hardest.

Some governments continue to provide a type of fossil fuel subsidy known as export credit guarantees to coal plants, but these are become scarcer. South Korea’s government committed recently to end overseas financing to coal plants, whilst Japan also promised to restrict such finance.

Financiers of coal plants cannot rely on these subsidies for much longer at a time of falling profitability. As leading insurance firm AXA pointed out, coal is “very much a commodity of the past,” and Southeast Asian banks should avoid getting left holding the bag in this accelerating global energy transition.

Tim Buckley is IEEFA’s Director of Energy Finance Studies, Australia/South Asia. This commentary first appeared in the Asia Times.