The proposed tax could affect up to 68 million tonnes per annum of Indonesian coal exports and $US11 billion of company value.

Coal miners in Indonesia who already pay about 20% of their revenue to the government in taxes and royalties face an additional burden which could increase their cost of production by $US19 per tonne.

Wood Mackenzie senior coal research analyst Rohan Kendall said that while Indonesia will likely remain the largest seaborne thermal exporter up to 2020, the introduction of an export tax could deteriorate the country’s competitiveness in the industry.

“Indonesian cash costs have doubled since 2006,” he said.

“This was not an issue while coal prices were rising but now that prices have softened it is important to constrain costs to keep projects viable.”

Kendall related the export tax to recent industry-rattling price hikes in nearby Australia.

“An Indonesian export tax would have a larger effect than the combined impact of Australia’s minerals resource rent tax and carbon tax, which we estimate will decrease the value of the Australian coal industry by $9 billion,” he said.

The proposed tax follows a pattern of newly passed regulation in the country designed to increase state revenues from the mining industry.

The Sydney Morning Herald quoted Australian ambassador to Indonesia Greg Moriarty as referring to the recent regulatory trend as “economic nationalism”

“Over the past six months in particular, the business climate has seemed to be getting tougher for some Australian exporters and some categories of foreign investors in Indonesia,” Moriarty said.

Even without the export tax, Indonesia will experience increasing costs since much of future coal production in the country will be at greenfield sites with limited access to rivers suitable for coal barge navigation.

Indonesia’s principal coal customers are India and China.