Bambang Gatot, Director General for Coal and Minerals at Indonesia's Ministry of Energy and Mineral Resources, said coal production in Indonesia will remain in decline as long as coal prices continue to fall. Indonesia’s November benchmark thermal coal reference price (set by the government) fell 5.2 percent (m/m) to USD $54.43 per metric ton (FOB) from USD $57,39 per metric ton in the preceding month hence touching a new all-time record low since the start of this reference price in January 2009. So far this year, the reference price has fallen 15.0 percent.

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

2015    Price
January    63.84
February    62.92
March    67.76
April    64.48
May    61.08
June    59.59
July    59.16
August    59.14
September    58.21
October    57.39
November    54.43

Source: Ministry of Energy and Mineral Resources

Adhi Wibowo, Director of Business Development of Coal at the Energy Ministry, said reduced coal production has no impact on domestic consumption of coal in Indonesia. Several years ago, Indonesia implemented the domestic market obligation (DMO) for coal in a bid to ensure that local buyers have access to Indonesian coal. Each year, the government sets a new DMO for coal. This year the DMO was set at 62 million tons, slightly down from last year's 63 million tons. Wibowo said the government allows coal miners to cut production rates as long as they comply with DMO allocation regulations.

Indonesia's coal export performance, on the other hand, is heavily affected by global conditions. Indonesian coal exports have plunged 32.4 percent to 215 million tons in the first ten months of 2015, compared to 318 million tons in the same period last year.

Coal Production, Export and Domestic Market Obligation in Indonesia:

(Jan - Oct)
382 million tons 322.5 million tons
(Jan - Oct)
318 million tons 215 million tons
Production Target 435 million tons 425 million tons
Domestic Market Obligation  63 million tons  62 million tons

Source: Ministry of Energy and Mineral Resources

Indonesian Production, Export and Consumption of Coal:

   2007  2008  2009  2010  2011  2012  2013  2014
Production   217   240   254   275   353   412   474   458
Export   163   191   198   210   287   345   402   382
Domestic    61    49    56    65    66    67    72    76

¹ indicates forecast
in million tons

Source: Indonesian Coal Mining Association (APBI)

Further Reading:

Overview & Analysis of Indonesia's Coal Industry