Director for coal at the Indonesian Energy and Mineral Resources Ministry, Edi Prasodjo, stated that the coal production realization in the first half of 2014 has already exceeded half of the country’s coal production cap target (which is set at 421 million tons in 2014). The government sets a limit to total domestic coal production to curb coal exploitation in order to secure future supplies for domestic consumption (especially as Indonesian coal miners have been boosting production numbers to offset weakening coal prices). Traditionally, most of Indonesian coal output has been exported. However, the government wants to raise domestic consumption, particularly to fuel power plants for electricity generation (as well as coal liquefaction and gasification).  

Indonesian Coal Statistics:

     2006    2007    2008    2009    2010    2011    2012    2013
Production     194     217     240     256     275     353     383     421
Export     144     163     191     198     208     272     304     349
Domestic      49      61      49      56      67      80      79      72

in million tons
Source: Ministry of Energy and Mineral Resources

According to data from the Energy and Mineral Resources Ministry, coal reserves of Indonesia, Southeast Asia’s largest economy, currently stand at 31.96 billion tons (of which 8.9 billion tons are proven).

In recent years, the global slowdown (particularly reduced demand from China) has resulted in falling global coal prices. The price of thermal coal at Australia’s Newcastle port, which forms the benchmark for Asian coal, fell to USD $70.35 per ton in the week ending on 27 June 2014, the lowest level since September 2009.

Meanwhile, the Indonesian Coal Mining Association (APBI) requested the government to combat illegal coal mining instead of capping production figures. According to the APBI, illegal mining in Indonesia has resulted in the theft of 56 million tons of coal in 2012, contributing to the oversupply on the global market, leading to falling coal prices.

Further Reading:

An overview of the coal mining sector in Indonesia