On a year-on-year basis, the HBA has risen nearly 12 percent. Meanwhile, Newcastle Coal Futures (for March Delivery) have jumped nearly 16 percent since the start of the year.

In the second half of 2016 global coal prices started to improve suddenly and rapidly (after about five years of decline). This recovery was primarily attributed to changing coal mining policies in China where authorities decided to curb coal output in order to boost coal prices, hence allowing local coal miners' corporate earnings to improve. This was important because the rising non-performing loan ratio in China's banking sector became a problem. The rising NPL ratio was particularly high in China's mining sector as local coal miners had obtained loans in recent years but were struggling to repay these loans amid low coal prices.

After a short dip at the start as well as the middle of 2017, coal prices continued their rapid recovery in August. This is partly caused by rising global coal demand (especially ahead of the winter period). However, it is important to realize that China is basically determining the direction of coal prices. When it wants prices to rise, then it simply starts to import more coal from abroad.

Several Indonesian coal miners that are seeking to acquire local coal miners include Tambang Batubara Bukit Asam, Indo Tambangraya Megah, Indika Energy, Dian Swastika Sentosa, ABM Investama, and Adaro Energy. Besides aiming to boost production capacity, such acquisitions are also a strategy to replace some of the companies' existing coal mining concessions that are to expire soon.

For example, Indo Tambangraya Megah is looking for acquisitions because two of its six coal fields will be shut down in the second quarter of 2018. In September 2017 Indo Tambangraya Megah already acquired a 70 percent stake (worth USD $9.5 million) in Tepian Indah Sukses, which controls 2,065-hectares of coal mines in East Kalimantan (estimated to contain 4.7 million tons of coal).

Bukit Asam, which so far has most of its coal mines on Sumatra, is also looking at Kalimantan for acquisitions as the company expects to see double-digit coal sales growth in 2018. Kalimantan and Sumatra are the key coal producing islands in Indonesia.

Indonesian Government's Benchmark Thermal Coal Price (HBA):

Month  2012  2013  2014  2015
 2016  2017
January 109.29  87.55  81.90  63.84  53.20  86.23
February 111.58  88.35  80.44  62.92  50.92  83.32
March 112.87  90.09  77.01  67.76  51.62  81.90
April 105.61  88.56  74.81  64.48  52.32  82.51
May 102.12  85.33  73.60  61.08  51.20  83.81
June  96.65  84.87  73.64  59.59  51.87  75.46
July  87.56  81.69  72.45  59.16  53.00  78.95
August  84.65  76.70  70.29  59.14  58.37  83.97
September  86.21  76.89  69.69  58.21  63.93  92.03
October  86.04  76.61  67.26  57.39  69.07  93.99
November  81.44  78.13  65.70  54.43  84.89  94.80
December  81.75  80.31  69.23  53.51 101.69

in USD/ton
Source: Ministry of Energy and Mineral Resources