Indonesia plans to adjust up royalty rate on coal and gold in an attempt to boost state revenues after prices of the commodities have recovered, Reuters reported citing an Indonesian official on January 15.

"In an effort to increase state revenue, we are in the process of adjusting the gold and coal royalty rates," Ridwan Djamaluddin, the director general of minerals and coal at the ministry, told an online conference.

Indonesia now plans to revise coal royalty payments to a system based on both calories and market price, as opposed to just calories now, Ridwan added.

Companies currently pay 2-7% of coal sales to the central government in royalties, while gold royalty payments are now set at 3.75-5% of gold sales, according to Reuters report.

Indonesia, the world's largest exporter of thermal coal – mainly used for power generation, inked a $1.47 billion's worth of supply contract with China late last November. From December, Indonesian coal prices began surging thanks to soared purchases from Chinese end buyers after the world's largest coal importer lifted restrictions on coal imports, except from another major global coal exporter Australia.

As of January 15, Indonesian 3,800 Kcal/kg NAR thermal coal was assessed by sxcoal.com at $48.5/t FOB, rising straightly from $28/t in early November to a new high since mid-July, 2018. The upswing is expected to keep until at least the end of this month as supply of the fuel remained tight in China.

(Writing by Alex Guo  Editing by Tammy Yang)
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