Business

Coal miners to boost production

Coal production in Indonesia — a major thermal coal exporter — will keep growing next year as the country’s miners increase their output to tap expected higher demand.

The deputy chairman of the Indonesian Coal Mining Association, Herman Kasih, said the country’s coal production could hit 450 million tons next year.

“Coal miners are targeting higher production. There’s growing demand in the global market, including from Japan, which will increase coal purchases after it shuts down its nuclear generated power,” Herman said.

Japan closed its last operating nuclear reactor in September, following a tsunami that hit the country in March 2011. The country now has all of its 50 nuclear reactors offline.

Japan has long been a main destination for Indonesian coal.

Energy and Mineral Resources Ministry mineral and coal general director R. Sukhyar said Indonesia’s coal production would reach 421 million tons this year, seeing hopes of output at 391 million tons fade.

This year, total production will be around 3.4 percent growth compared to the 407 million tons mined in 2012.

“Next year, the production is estimated to remain at around 400 million tons,” Sukhyar said.

As the association and the ministry played safe on the outlook, the country’s coal producers have set a two-digit increase in production for next year.

Jakarta listed PT Bumi Resources, the controlling shareholder of two giant coal miners — namely PT Kaltim Prima Coal and PT Arutmin Indonesia — has said it expected up to a 15 percent increase in production next year from this year, estimated at 74 million tons in mined coal.

PT Berau Coal, the country’s fifth largest coal digger, is targeting to mine 25.7 million tons of coal next year, according to the company’s general manager for corporate communication, Singgih Widagdo. The production target will be almost 12 percent growth compared to 23 million tons this year.

State-owned PT Bukit Asam has set a production target of 22 million tons next year, increasing by around 22 percent from this year’s output, which is expected to reach 18 million tons.

Indonesian miners growing production will encourage oversupply in the global market, whose demand recovery, particularly in the biggest-consumer China, is not as quick as expected and will unlikely absorb growing supply, analysts have pointed out.

“Low-cost producers maximize production volume. Production will increase further owing to capacity expansions that producers made in 2010-2012,” Moody’s Investors Service said in a report.

Moody’s expects no massive changes in the coal price, and for it to remain flat at around US$80 to $85 per tons for thermal coal and at $150 per ton for coking coal next year.

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