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25 September 2020 (closed)
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Despite the recovering coal price, actual coal production in Indonesia remained relatively low up to the third quarter in 2017. Based on data from Indonesia's Energy and Mineral Resources Ministry, national coal output reached 294.5 million tons up to 31 August 2017, roughly 62 percent of the full-year target (477 million tons) that was set by the Energy Ministry.
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:
(in mln tons)
(in mln tons)
(in mln tons)
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):
Source: Ministry of Energy and Mineral Resources