EAST KUTAI: Despite rebounding coal prices and increasing demands predicted for next year, thousands of workers in Indonesia’s biggest coal-producing province, East Kalimantan, continue to be laid off, Jakarta Globe reported.
Officials estimated that 1,400 people have been laid off in Kutai Kertanegara and Samarinda, two of the biggest coal producing areas in East Kalimantan, in the last two months. The neighboring district of Kutai Timur is also feeling the pressure where mining companies have reduced their operational hours to cut costs since October.
Thamrin, head of Kutai Timur’s industrial relations division said a total of five companies have already begun laying off as many as 200 of their employees each.
“We have received reports directly from the companies,” he said adding that there were about 150 more workers who were at risk of losing their jobs.
“There is one company who has begun to send their workers home,” Thamrin said, identifying the company as Madani, the contractor of Indonesia’s largest coal producer, Kaltim Prima Coal.
Thamrin said Madani has 250 employees, but 150 people had been told not to come to work and were provided only with basic salaries. The status of these workers is still in limbo.
“We hope layoffs would be a last resort. There are still a number of ways the company can go … like cutting down on the working hours or on temporary holidays,” he said.
Kutai Timur district chief Isran Noor said his office is now preparing for the worst as local coal prices remain sluggish. “We will prepare so that those who got laid off will find work in the agricultural sector,” he said.
Since the start of the year, at least 100,000 workers in East Kalimantan have been laid off as global prices for the commodity continue to fall.
The East Kalimantan chapter of the Indonesian Employers Association, Apindo, said the majority of layoffs involved small-scale companies operating under permits issued by district administrations.
The sector employs a third of the total workforce in East Kalimantan’s coal-mining sector.
Some companies have suspended production as the price of coal dropped by about a third from a year ago.
East Kalimantan’s coal output is now 20,000 metric tons a month, down from 50,000 tons earlier in the year.
Standard & Poor’s Ratings Services recently said coal miners in Indonesia might find an alternative to the risk of lower prices of the commodity by shifting some of their resources to electricity generation.
The rating agency said that the power sector is already attracting coal producers because of the prospects for electricity consumption. It forecasts Indonesia’s economy to grow about 6 percent annually for the next five years, but it expects electricity use to expand at a faster rate of 8 percent to 10 percent.
Some coal miners already have plans to construct power plants. Adaro Energy, the country’s second-largest coal miner, is working with two Japanese firms to build a 2,000 MW coal-fired power plant at a cost of around $4 billion in Central Java. Adaro, however, has seen the project delayed because the government has been slow to issue a permit.
Bukit Asam, a state-controlled coal miner, is also looking at the power business as an opportunity to offload its commodities.