The idea of providing tax incentive to coal mining companies came from Deputy Energy and Mineral Resources Minister Rudi Rubiandini, who said earlier that the government would need to provide fiscal incentives to ease coal miners’ financial hardship if the coal price fall continued. He promised the government would provide the tax incentive if coal prices continued to fall and reached $60/ton.

As of late August, Indonesia’s coal reference price (HBA) fell to $84.65/ton, declining 3.4% from $87.56 in July and 25% from its high of $112.87/ton in March. Some of the country’s major coal producers have revised their annual target due to the declining coal prices. For example, PT Adaro Energy, the nation’s second-largest thermal coal producer, has revised its annual production target for 2012 to between 48 million and 50 million metric tons (mt), down from 50 million to 53 million mt.