20 November 2019 (closed)
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While Indonesian authorities try to curtail the nation's coal production in order to safeguard plenty of supplies for future use (particularly to fuel Indonesia's coal-fired power plants), it is difficult for local coal miners to resist producing and exporting more coal now coal prices are still about 50 percent higher compared to the situation one year ago.
Bambang Gatot Ariyono, Director General of Coal and Mineral Mining at Indonesia's Energy and Mineral Resources Ministry, says domestic coal consumption is relatively low and therefore Indonesian coal miners are highly dependent on coal exports. He added that the central government would like to see Indonesia's coal production realization falling to 400 million metric tons by 2019.
And considering about 57 percent of the new power plants in the government's ambitious 35,000 MW power program are planned to be coal-fired, it would mean that domestic consumption of coal is set to rise. This would imply that - with the production target at 400 million tons by 2019 - miners' coal exports will have to decline. Through the energy program, the government aims to slow coal shipments from Indonesia gradually until a full stop in 2046, the latest.
Although setting a coal production target every year, the fact is that the Indonesian government's coal production targets are rarely achieved. For example, in 2016 the government set a target of 434 million tons of coal. However, actual coal production (which does not even include illegal coal output) was recorded at 434 million tons last year. For 2017 the government set its coal production target at 413 million tons. However, Bambang Gatot Ariyono says actual coal production could rise up to 470 million tons this year as local miners are enthusiastically producing coal amid the improved coal price environment, while there also have emerged brand new coal mining companies that started - or are set to start - production in 2017.
Regarding Indonesia's coal production, export and domestic consumption, the table below shows that results are in accordance with the government's targets in the 2013-2016 period: coal production and exports are gradually declining over this period (although they may rebound in 2017), while domestic coal consumption is gradually rising.
Indonesian Government's Benchmark Thermal Coal Price (HBA):
Source: Ministry of Energy and Mineral Resources
Indonesian Production, Export, Consumption & Price of Coal:
(in mln tons)
(in mln tons)
(in mln tons)
Sources: Indonesian Coal Mining Association (APBI) & Ministry of Energy and Mineral Resources