Business

Coal production may reach
370 million tons this year

Given current production trends, Indonesian coal output may reach 370 million tons by the end of this year, if rainfall is not too excessive during the final three months, the Indonesian Coal Mining Association (APBI) announced.

The association said that from January to August, the country’s coal production had already reached 235 million tons. Earlier estimates had targeted this year’s coal production to between 340 million and 360 million tons.

“If between October and December, rainfall is high, total production may be around 340 million. But if everything goes to plan, production may nudge 370 million tons,” APBI’s chairman Bob Kamandanu told reporters on the sidelines of the Indonesian Mining Conference & Exhibition 2011 in Jakarta on Thursday.

In 2011, Bob predicted that around 65 million tons of coal would be sold to the domestic market through the domestic market obligation (DMO) regulation, which requires coal producers to sell a part of their production to local buyers.

In 2012, he estimated that 75 million tons of coal would be allocated for the country’s coal users.

According to the Energy and Mineral Resources Ministry, domestic coal needs in 2011 reached 79.97 million tons, comprising 66.28 tons for coal-fired power plants; 340,000 tons for metallurgy; and 12.35 million tons for cement, fertilizer, pulp and textile industries.

Out of the 66.28 million tons of coal allocated for generating electricity, 55.82 million tons is allocated to state electricity company PT PLN; 8.97 million tons to independent power producers; 830,000 tons to PT Freeport Indonesia; 470,000 tons for PT Newmont Nusa Tenggara; and 190,000 tons for PT Pusaka Jaya Palu Power.

To date, only 63 coal mining companies are obliged to comply with the DMO. Next year, the amount of coal sold under the DMO scheme is predicted to reach 82.07 million tons, of which around 69.7 percent will go to PLN’s power plants.

In 2012, coal mining companies will be obliged to sell 24.72 percent of their output to domestic users under the DMO ruling.

“The government is aiming to boost domestic coal consumption to 100 million tons by 2014,” said Bob.

Indonesia, the world’s largest thermal coal exporter, produced 275 million tons of coal last year. In 2012, the government set the production target at 332 million tons, while the APBI calculates that the amount may hit 380 million tons.

Currently, there is an increase in demand for Indonesian coal from the international market, due to the shutdown of Japan’s nuclear power plants following an earthquake and tsunami in March. The natural disasters have made coal the favored energy resource to replace nuclear power.

APBI also confirmed earlier that this year’s prices have been much better than last year’s, reaching US$120 per ton for coal between 6,300 and 6,500 kilocalories per kilogram (kcal/kg). Last year, the average price was only $90 per ton. Starting in 2014, the government of Indonesia will officially apply a ban on low-grade coal exports. To anticipate the regulation, APBI revealed that two coal upgrade facilities are ready to be installed in South Kalimantan and South Sumatra in 2012 and 2014, respectively. The upgraded brown coal (UBC) process can crank up the calorific value of coal from 4,500 kcal/kg to 6,100 kcal/kg.

— JP/Rangga D. Fadillah

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