Fitch: No change for Indonesia mining companies

Fitch Ratings said that Indonesia's new mining regulation that restricts mining companies from outsourcing coal digging and loading activities does not have any immediate rating implications for rated coal mining companies or coal mining contractors.

Fitch said it expects the impact on mining companies in the agency's rated universe to be limited, despite differences in strip ratios at which coal is produced and the level of outsourcing in mining activities.

The capital expenditure required and operating costs associated with the restricted activities are small compared to the overall coal production costs, the agency said.

PT Adaro Indonesia, rated BB+ with stable outlook, outsources its entire mining activities. Its affiliate PT Saptaindra Sejati mined around a quarter of Adaro's first half of 2009 production, Fitch said.

PT Kideco Jaya Agung, which is 46% owned by Indika Energy Tbk. (rated B+ with stable view) has allocated higher capital expenditure for mining equipment since 2009.

PT Berau Coal, rated B+ with stable view, fully outsources its mining activities to independent contractors.

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