By: Alfonsus Atu Kota
Edi Prasodjo, Director of the Directorate for Mineral and Coal Enterprises of the Ministry of Energy and Mineral Resources (ESDM) was in a spirited mood when he addressed the audience at an Award Night for the Performance of Mining Work Plan and Budget (RKAB in its Indonesian abbreviation) which took place at Hotel Goodway, Batam, Riau Islands on 20 June 2012. The event was the first of its kind to be organized by the Directorate. To Mr. Prasodjo’s liking, the event went smoothly and successfully.
Entrepreneurs in the industry and government officials were in attendance there. The awards were given to companies with excellent performance in six different categories, namely financial, commercial relations, exploration, licensing, production and marketing, as well as production stage.
Among the winners were PT Wahana Baratama Mining, chosen as the winner for Best Financial Management category. PT Kaltim Prima Coal was picked for the category of Best Commercial Relations. For the category of Best Exploration, PT Berau Coal was the winner. Three remaining categories, namely Best Licensing, Best Production and Marketing, and Best Production Stage, were solely picked up by PT Adaro Indonesia, the night’s biggest winner.
As explained by Mr. Prasodjo, the granting of the awards was the initiative of the Directorate of Mineral and Coal Enterprises as a follow-up to a meeting of the government and holders of Coal Mining Exploitation Work Agreement (PKP2B) in Bali, last year. The goal is to maintain close cooperation between the Government and the PKP2B holders. Without good cooperation, claimed Mr. Prasodjo, the Government would not be able to fully implement its plans.
"The granting of the awards is actually a tool to motivate mining companies who are holders of PKP2B to be more determined and responsible in implementing their good mining practices," said Mr. Prasodjo to TAMBANG Magazine right after the event at the Hotel Goodway. He pointed at new advances in today’s mining paradigm.
Previously mining was just a pasture for entrepreneurs to grab profits. The situation has changed. The benefit of mining should now be collectively enjoyed by companies and communities. All stakeholders should therefore implant their mutual trusts, as failure to do so will only result in unrelenting conflicts between the parties. "Managing the environment is among the investment to instill trusts in the community," said Mr. Prasodjo.
Indeed, companies of today have to oversee tougher challenges than ever before. There are at least four aspects to always be observed by the holders of PKP2B: they should be in favor of the eradication of poverty, the creation of jobs, the growth of the community (at the mining areas) and the sustainable environment. "The four aspects should be seen as long-term investment. Companies however should not just see it as a burden, as in the long run it will be mutually beneficial. We should be wise in utilizing coal for long term domestic interests," he added.
On behalf of his management, Priyadi, Head of Mining Techniques at PT Adaro Indonesia stated that his company was impressed with the award. He affirmed that the achievement was a result of extensive efforts, hard works and mutual cooperation between his company, the government and the community. He noted that the work area of his company is really big. Transporting mined products does not only involve a road of 80 km, but also a river transportation system of up to 240 km is required. “Thanks to the supports of all parties, especially the communites in the mining areas, we could perform really well,” he said to our reporters. He further mentioned that the award would become a motivation to the management and all employees at the mining sites. “Our hard works have been duly recognized and appreciated by the government,” said Mr. Priyadi.
The following is an excerpt from TAMBANG Magazine’s interview with Edi Prasodjo, Director of the Directorate for Mineral and Coal Enterprises of the Ministry of Energy and Mineral Resources (ESDM), on the granting of the award and the dynamics of mining in Indonesia. The interview took place at Goodway Hotel in Batam, Riau Islands, in the end of June:
Do you perceive that the price of coal will continue to rise?
Depletion of the reserves of petroleum is correlated symmetrically with the increase of the global petroleum price, which has increasingly placed coal as a reliable energy source. The price of coal has shown a significant trend of increase since Indonesia recognized it as one of the commodities of trade.
In the 1980s, coal prices were still ranged from $US 20. Now it has reached the $US 80 figures. However it has still fluctuated, as the increase of coal price in the international markets is mainly due to a four-yearly cycle.
What does that mean?
If we look at the trend of the coal price, it has indeed been fluctuated. Although in terms of macro(economy), its graphic continues to raise despite the fluctuation. Every four years the price is ever-changing. It could go down and then up again.
This is principally influenced by the global economy. Coal is part of alternative energy. Its use depends on the needs. The price is therefore heavily dependent on the oil price. When the oil price goes up, so does the coal price automatically. If oil price goes down, so does coal’s. It basically follows the trend of the oil price.
The coal has always followed the global price trends. If it's winter in Europe, for instance, then there is tendency that the coal price will rise due to the high requirements. Especially if it's getting really cold there. However, during the summer there are lesser needs of coal, hence the lower price.
The promising coal price has triggered a massive, at times uncontrollable, exploitation. The tendency of export is even more massive. The Government must then exert some efforts to protect the reserves from being drained.
I duly called all parties to perceive coal not just as a trading commodity, but as an alternative energy source. If we remain to see it as a commodity for sale only, then we might as well always sell it outright. We have to think of coal as an energy in the long run.
Do we really need certain regulations, such as export duties and taxes as implied to minerals?
First and foremost, we need to place the difference between minerals and coal. Sorry to say, but I would not answer your question that pertains to out-bound duties and taxes, as this will be out of my domain. However, I would like to emphasize here that there will be no export duties and taxes for coal (as they are for minerals).
My directorate is tasked to perform in depth examination and then provide inputs to our leaders. We however would not dare to say this and that, but let me just call for a more responsible management of production and mining to achieve the good mining practices. We should always ensure that mining would bring as many advantages as possible to this country.