Chairman of the Indonesian Coal Mining Association (APBI) Bob Kamandanu expects that Indonesia's coal production will decline about 5 percent to 400 million tons in 2014 after the government asked miners to scale back production rates in order to safeguard future domestic supplies as the country needs sufficient energy resources for its future energy supply. Amid low domestic demand, the government asked Indonesian coal mining companies to limit the country's total coal output at 397 million metric tons.
Of the targeted coal production rate of 397 million tons in 2014, the government wants 73 million tons to be allocated to the domestic market. The government aims to safeguard domestic energy resources for future energy supply not only because Indonesia's large and rapidly expanding population (240 million people) is increasingly being connected to the country's electricity grid, but also because it expects a surge in energy demand from industries. As a new law stipulates that minerals need to be processed domestically first before export is allowed, the country will see the establishment of many new smelters and other processing facilities, thus increasing domestic energy demand.
In 2013, the monthly average coal price was USD $85.3 per ton, a decline of 12 percent from the previous year. Kamandanu said that the price may fall to USD $80 per ton in 2014. The danger of a falling coal price is that miners increase production rates in order to compensate for the lower price, particularly as coal demand from China and India is still strong.
Visit our coal section to read more about Indonesia's coal production, export and domestic demand.
Indonesia's Coal Statistics:
in million tons
Source: Ministry of Energy and Mineral Resources