Arutmin withholds $50 million in coal royalty

Arutmin withholds $50 million in coal royalty

Leony Aurora, The Jakarta Post, Jakarta

Local coal producer PT Arutmin Indonesia is withholding some
US$50 million in royalties from its coal output, saying the
government has not yet provided protection against unconventional
mining practices.

The company stalled the payment from 2004 and the first
quarter of this year, Arutmin's operation director Endang Ruchiat
said in a hearing with House of Representatives Commission VII,
overseeing mining and energy, on Wednesday.

"We will pay (at least) half of the payment this year," he
said.

The company said the government should protect the mines from
illegal miners, who used heavy equipment and were organized.

"We have to pay royalty, but we also demand our right to be
protected," said Endang.

Ministry of Energy and Mineral Resources director general of
geology and mineral resources Simon Sembiring confirmed that
there had been a delay in the payment of royalties.

According to Simon, Arutmin withheld the payment as the
government owed them value-added taxes, which should have been
returned. He did not elaborate.

"Arutmin will pay it in installments. We have already a
schedule for that," he said.

In its conclusion, Commission VII urged Arutmin to settle the
debt immediately and disclose the payment scheme within a week.
The scheme is needed to ensure that the House has all the
necessary data to draft the state budget, the legislators further
said in the session's conclusion.

Arutmin, a subsidiary of the country's largest coal producer
PT Bumi Resources, operates open pit mines in Senakin and Satui,
South Kalimantan.

Last year, it produced 15 million tons of coal. Arutmin aims
to raise output to 18 million tons this year. The government gets
13.5 percent from coal sales as royalty.

Arutmin's reserves increased by 31.6 percent in March this
year to 375 million tons as compared to 285 million tons of
reserves recorded in June last year.

Bumi's finance director Eddie Soebari said the increased
reserves were due to rising global coal prices, which made deeper
mining economically viable.