Hendra Sinadia, Deputy Executive Director at the Indonesian Coal Mining Association (APBI), said the global oversupply (in coal) persists and therefore it is difficult for the coal price to rise significantly, even though some players have cut their coal output.

Over the past year many Indonesian coal miners have ceased operations due to the low price. Environmentalists are concerned and protest as local coal miners are reluctant to pay for the reparation or clean-up of the scarred landscape they have left behind: abandoned mine pits, treeless hills and polluted waters.

So far this year, the HBA price has been fluctuating up and down between the high of USD $53.20 and low of USD $51.20 per metric ton. This is a different performance compared to the preceding two years when there was a much clearer downward trend. As the HBA price has been hovering near the USD $52 per metric ton level over the past couple of months, it feeds speculation that coal prices have touched their bottom (the slightly rising HBA price in March and April was also caused by the finalization of coal contracts between Australia and Japan).

The HBA is based on four indices, each contributing one-fourth to the total overall price: (1) the Platts Kalimantan 5,900 kcal/kg gross, (2) the Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR), (3) the Newcastle Export Index (6,322 kcal/kg GAR), and (4) the globalCOAL Newcastle (6,000 kcal/kg NAR) index.

The HBA forms the basis for determining prices of 75 Indonesian coal products as well as for the calculation of the royalties that Indonesian coal miners have to pay to the state for each metric ton of coal they sell.

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

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

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