Indonesia's key thermal coal price, which is used as the basis for determining prices of 77 Indonesian coal products as well as the calculation of the royalties that coal producers need to pay for each metric ton of coal they sell, has now reached the highest level since December 2016 (when the price peaked at USD $101.69 per ton). However, if we exclude that month, then the current coal price is at its highest level since June 2012.

The HBA is based on the Platts Kalimantan, the Argus-Indonesia Coal Index 1, the Newcastle Export Index (formerly the Barlow-Jonker index), and the globalCOAL Newcastle index, each contributing 25 percent to the price.

Hendra Sinadia, Deputy Executive Director of the Indonesian Coal Mining Association (APBI), said the Argus-Indonesia Coal Index 1 contributed most to the rise of the HBA price in October 2017.

Irwandy Arif, Chairman of the Indonesian Mining Institute (IMI), explained that the rising coal price is due to several coal-fired power plants entering the test phase in Asia. Meanwhile, slow development in renewable energy sources also allow growth of the coal price. Arif expects to see no significant changes for the HBA price over the next couple of months. Meanwhile, for the coming three years he put his forecast for the coal price in the range of USD $60 - $80 per metric ton. However, it will largely depend on coal policies of China and India whether this forecast is accurate.

Read more: Overview of the Coal Mining Industry in Indonesia

For the Indonesian government the high HBA price is positive as coal accounts for about 80 percent of the government's total non-tax revenue from the mineral and coal mining sectors. Up to 2 October 2017 a total of IDR 28.63 trillion (approx. USD $2.1 billion) was collected in non-tax revenue from the coal mining sector, or 88.4 percent of the full-year target (hence the target, which was based on an average HBA assumption of USD $75 per ton, will most likely be achieved).

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

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