Monnet wants Indonesian government to ease mining policies

Monnet Ispat and Energy is engaged in negotiations with the Indonesian government asking it to dilute some strict conditions put forth just as the company is about to start coal mining operations. The conditions laid down by the government include steep hike in mining royalty, giving back idle mine land, higher local value conditions, all of which might turn the company's mine unviable.

"Like India, Indonesia also had a change in government and they had policy changes. They now want us to come and negotiate. It is now a take-something-leave-something kind of deal, sort of commercial way of solving the problem. The negotiations are likely to be over by two months maximum," an official with the company said.

Monnet Ispat through its 100 % subsidiary Monnet Global had acquired Indonesian coal company, PT Sarwa Sembada Karya Bumi, in the Jambi province of Sumatra.

Spread over an area of 25,000 hectares with substantial reserves of 200 million tonne, the coal mine is considered to be one of the largest thermal coal mines in the world.

"They are looking to increase domestic value-addition of coal, some increase in royalty and cess, domestic employment, overall mine area retrenchment as they want to raise forest cover on unused land," Amitabh Mudgal, president, marketing and corporate affairs of Monnet, said on the sidelines of Indian Coal Markets Conference organised by Mjunction services.

"On the taxation issue we are seeking legal advice. We would definitely be opposing any steep hike in taxation. The area retrenchment we believe is a fair demand and we are ready to relinquish the land where we don't have any coal," he said.

Apart from the changes in policies, Monnet is also facing other issues like overlapping of different mine blocks for which the company has requested authorities to help it sort out the issue before it is included with other stringent conditions put up by the government.

Meanwhile, Monnet is planning to start operations in December at its 2 MT pellet plant at its integrated steel plant at Chhattisgarh.

Monnet also has a captive coal mine linked to its merchant power plant.

"The mine has cleared the stage two of clearances but the mining lease has not been signed for two years as the whole issue is now subjudice."