TheJakartaPost

Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post

Coal output to increase on better price forecast

Indonesia, the world’s largest thermal coal exporter, aims to see higher growth in its coal production on estimated better global prices

Amahl S. Azwar (The Jakarta Post)
Jakarta
Sat, January 5, 2013

Share This Article

Change Size

Coal output to increase on better price forecast

I

ndonesia, the world’s largest thermal coal exporter, aims to see higher growth in its coal production on estimated better global prices.

Energy and Mineral Resources Deputy Minister Rudi Rubiandini said on Friday that output would increase by 1.2 percent to 391 million tons from 386 million tons last year.

Rudi said that the government had expected the Indonesia coal reference price (HBA) to reach over US$100 per ton this year following potential economic recovery as showed by the recent US fiscal-cliff budget deal.

The country’s average HBA last year only reached $95.5 per ton, far below the average price level of $118.4 per ton throughout 2011.

“Since the US has prevented the so-called fiscal cliff, we can expect their economy to improve. There’s some optimism that the global economy will recover. This will drive demand for coal and minerals,” he said.

The fiscal cliff refers to the drastic measures involving steep tax increases and cuts in government spending that the US would have been forced to implement on Monday at midnight, when George W. Bush-era tax cuts expired, barring a deal.

Analysts had feared that the measures might have pushed the US economy back into a recession, given that there would have been a whopping $607 billion cut at a time when the US economic recovery remains sluggish and needs more spending.

However, the US House passed a bill on Wednesday that averted automatic implementation of the measures.

In addition, Rudi said, the growth in China was also expected to increase the country’s demand for Indonesia’s coal and minerals. Companies from China, as well as India, have traditionally become the consumers of Indonesia’s mining products.

Last year’s decline in prices had forced local coal miners to cut their output in a bid to avert losses, and readjusted the supply and demand in the course of the global economic slowdown.

Publicly listed PT Adaro Energy, the nation’s second-largest thermal coal producer, after PT Bumi Resources, for example, had trimmed its annual output target to between 48 and 50 million metric tons from its previous target of 50 to 53 million tons.

However, the ministry’s year-end reports revealed that output rose by 9 percent to 386 million tons from 353 million tons in 2011. The figure also exceeded the government’s output target of 322 million tons.

Out of the total estimated production this year, the government expected 306 million tons, or 78 percent of the output, to be shipped overseas while the remaining 22 percent or 85 million tons will be for the domestic market.

The 2013 export target was higher by 0.6 percent from the exports realization in 2012 that topped 304 million tons, according to the ministry.

For 2013, Indonesia has trimmed the amount of coal that miners are required to give locally under its domestic market obligation (DMO) policy to 74.2 million tons or 9.4 percent lower than the 82.02 million ton quota imposed last year amid construction delays on several power plants.

Under the new quota, 45 coal mining companies operating under contracts of work (CoWs) will be required to supply 61.76 million tons in 2013, while 28 others working under mining permits (IUPs) will supply 10.31 million tons.

Chairman of the country’s coal association (APBI), Bob Kamandanu, said that the organization saw coal production in 2012 to be around 340 to 350 million tons, or lower than the previous target of 360 to 370 million tons.

Bob, however, is upbeat for improved production this year, estimated at between 360 million tons and 370 million tons.

{

Your Opinion Matters

Share your experiences, suggestions, and any issues you've encountered on The Jakarta Post. We're here to listen.

Enter at least 30 characters
0 / 30

Thank You

Thank you for sharing your thoughts. We appreciate your feedback.