Geo Energy doesn’t expect material impact from Jakarta’s plans to centralise commodity exports

[SINGAPORE] Coal producer Geo Energy said on Monday (Jun 22) that it does not expect the Indonesian government’s plan to centralise control of commodity exports to have a material impact on its business. 

This includes its mining operations, logistics, customer relationships and its export activities.

The group’s governance standards, operating practices and “longstanding engagement” with the Indonesia authorities also put it in a position to adapt to evolving regulatory requirements and maintain efficient business operations, it added. 

Meanwhile, Geo Energy noted significant progress on the development of the integrated infrastructure project comprising a 92 km hauling road and jetty in South Sumatra, which is on track to start its probationary phase operations in mid-July. 

It said: “Large-scale integrated logistics infrastructure of this nature will be increasingly important in supporting transparency and traceability requirements of Indonesia’s evolving regulatory framework, while strengthening the group’s long-term competitive position and opening up third-party throughput income streams.”  

The group said coal prices remained resilient, rising to US$67.26 a tonne as at Jun 19, from US$64.43 when the policy was first announced on May 22. 

Last month, President Prabowo Subianto announced that Indonesia would bring exports of all its strategic commodities under the control of a new state company. 

In early June, Indonesia’s Trade Ministry published technical regulations to bring coal, palm oil and ferroalloy exports under the control of a central government-owned firm.

Exporters of such commodities are now obliged to report their export activities to the country’s sovereign wealth fund, Danantara Indonesia. 

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Danatara later clarified that it would not assume ownership of existing export contracts, take over customer relationships or replace existing commercial arrangements between producers and buyers. 

Geo Energy added that Danantara’s core mission is to act primarily as a monitoring and compliance body, rather than a middleman or consolidator of commodity exports. 

The firm’s focus will also be on preventing fraudulent practices like under-invoicing and transfer pricing in Indonesian export operations, enhancing transparency and strengthening export governance. 

The group added: “(Geo Energy’s) directors are confident that the group’s strong governance framework, operational experience and prudent risk management practices will enable it to navigate the evolving regulatory landscape, while continuing to execute its business strategy and deliver long-term value to shareholders.”

Shares of Geo Energy closed at S$0.435 on Monday, down 1.1 per cent or S$0.005, before the news.