Share prices of some of Indonesia's biggest coal miners plunged on September 13 after the country's mining minister said he would be open to revising domestic coal pricing rules, Reuters reported on Sep 13.
PT Bukit Asam Tbk was worst hit, tumbling 17% to close at 10,075 rupiah ($0.7632), while PT Bumi Resources Tbk dropped 9% to 218 rupiah, and PT Adaro Energy Tbk fell 8% to 1,715 rupiah.
Domestic media reported that Energy and Mineral Resources Minister Ignasius Jonan was considering drafting new rules on marketing coal for domestic supply, as part of government efforts to cut electricity prices.
Recent high coal prices have put pressure on state electricity utility Perusahaan Listrik Negara (PLN), which buys the bulk of the roughly 90 million tonnes of coal consumed domestically each year.
Indonesia requires miners to set aside a portion of their output, based on assumptions of domestic demand.
"To devise the right coal price formula, Mr Jonan will definitely listen to input from related stakeholders, primarily coal companies," said Hadi Djuraid, who works in Jonan's office. However, Djuraid expressed there was no timeframe yet for a new pricing formula.
PLN has been pushing for the government to adopt a cost plus margin mechanism for coal purchases, which would allow it to maintain pricing stability, but which analysts say would hurt coal producers' profits. Djuraid, however, pointed out the government would not just take PLN's proposals into account.
PLN strategic procurement director Supangkat Iwan Santoso was earlier said the company hoped to set coal prices at cost plus a 15-25% margin.
The proposed pricing mechanism would likely dent coal companies' profits, said Vicella Tjhin, an independent analyst. Referring to Adaro and Bukit Asam, he indicated that the main impact would be on companies that sell to PLN.
(Writing by Becky Du Editing by Harry Huo)
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