By Antonio delos Reyes

February 14, 2024 - The Indonesian energy ministry's (ESDM) recent changes to the approval process for mining companies' work plan (RKAB) could hamper operations for some firms this year.

The ESDM is still processing more than 140 applications from coal producers and it is not clear how long the applications will take to process. It estimates the cumulative coal output of these companies at around 24mn-27mn t. Indonesia's coal production reached 770.24mn t last year, up from 685.8mn t in 2022 and exceeding the country's 2023 production target of 694.50mn t, according to ESDM data.

Under Indonesian law, domestic mining companies are required to have an approved RKAB in place in order to continue mining operations. The RKAB outlines the company's business operations which includes production and sales volumes, as well as infrastructure development and community programs. A regulation passed in September 2023 extended the RKAB's validity from one year to three years, providing higher business certainty for mining companies.

But the longer validity period has also resulted in longer approval processing times as authorities now need to cross-check more reports and projections, the ESDM said.

Under the new RKAB regulation, mining companies that had their RKABs rejected can only reapply once. If the application is rejected again, the mining company will be unable to carry out any business operations for the year.

Coal mining companies that continue to mine or carry out exploratory work despite not having an approved RKAB will be subject to sanctions ranging from written warnings, temporary suspension of business activities, to the revocation of their mining permits.

The Indonesian coal mining association said that while it understands there are delays in the RKAB approvals because of the new regulation, it also called for a faster approval process by the ESDM in order to minimise any impact to business operations.