Earlier, the Energy Ministry of Indonesia had already revised its full-year 2017 coal production target from 413 million tons to 477 million tons as the rising coal price was expected to cause a boost in production.

Moreover, Bambang Gatot, Director General for Coal and Minerals at Indonesia's Energy Ministry, said many coal miners that are active with a Mining Business Permit (in Indonesian: Izin Usaha Pertambangan, or IUP) are now entering the production phase and therefore the full-year production target had to be revised.

Besides limited coal production, coal supplies under the domestic market obligation (DMO) scheme also remains far from the target. The DMO is the minimum amount of coal that Indonesia's coal producers need to supply to the local market, specifically to coal-fired power stations. This regulation, set by the government, was designed to ensure sufficient resources for the power generation program in Southeast Asia's largest economy.

This year the DMO was set at 108 million tons. However, up to 31 August 2017 only 30.8 million tons - or 29 percent of the full-year target - had been supplied to the local market.

Read more: Overview of Indonesia's Coal Industry

Based on the Energy Ministry's assumptions, the biggest Indonesian coal producers in 2017 are Kaltim Prima Coal, Adaro Energy, Kideco Jaya Agung, Berau Coal Energy, Arutmin Indonesia, and Tambang Batubara Bukit Asam.

Indonesian Production, Export, Consumption & Price of Coal:

  2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Production
(in mln tons)
 240  254  275  353  412  474  458  461  419  477¹
Export
(in mln tons)
 191  198  210  287  345  402  382  366  333  369¹
Domestic
(in mln tons)
  49   56   65   66   67   72   76   87   86  108¹
Price (HBA)
(in USD/ton)
  n.a  70.7  91.7 118.4  95.5  82.9  72.6  60.1  61.8  84.2²

¹ government target
²
January-October 2017 period
Sources: Indonesian Coal Mining Association (APBI) & Ministry of Energy and Mineral Resources

Hendra Sinadia, Deputy Executive Director of the Indonesian Coal Mining Association (APBI), said it will be difficult to achieve the government's coal production target of 477 million tons in 2017 considering there only remain three months before the year-end. The key factor that explained relatively weak output in the first quarter and the start of the second quarter of the year was bad weather conditions that disturbed the coal production process in Kalimantan and Sumatra.

Indonesia's benchmark coal price (in Indonesian: Harga Batubara Acuan, or HBA) rose 2.13 percent month-on-month (m/m) to USD $93.99 per metric ton in October 2017. The average HBA price so far in 2017 stands at USD $84.22 per ton, up significantly from an average of USD $61.84 per ton in full-year 2016.

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
December  81.75  80.31  69.23  53.51 101.69

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

Bahas