T

he country'€™s total production of coal reached another high during the first six months of the year, with miners continuing to boost production, despite a decline in selling prices.

Coal output in Indonesia, the world'€™s top thermal coal producer and exporter, reached 213 million tons during January through June, up by 7.6 percent compared with 198 million tons over the same period last year, according to data from the Energy and Mineral Resources Ministry.

The figure represents more than half of the government'€™s overall cap for coal production throughout this year at 421 million tons.

The government capped coal output in the country to slow down exploitation and maintain reserves for domestic use.

Edi Prasodjo, director for coal at the ministry'€™s mineral and coal directorate general, said he remained optimistic that the production cap would not be exceeded.

'€œIt is still in line [with our target],'€ Edi said on Friday.

Most of the coal produced in the country during the first six months of this year, namely 158 million tons or about 75 percent of the total, was sold overseas, according to Edi.

Meanwhile, the remaining 25 percent or 55 million tons, were absorbed by the domestic market.

The government has been trying to boost domestic consumption, partly by supporting the development of mine-mouth power plants and promoting the use of coal for other purposes, such as in coal liquefaction and gasification.

However, selling the commodity seems to be a more interesting option for miners.

Following booming demand from China in the past few years, which pushed up prices, the country has seen growing production, making it a major coal exporter despite possessing only a small share in global reserves.

Indonesia'€™s coal reserves stand at 31.96 billion tons, of which 8.9 billion tons are proven, according to figures from the ministry. The country'€™s production is continuing to grow, despite weakening global prices that began to hit in late 2012.

The price of thermal coal at Australia'€™s Newcastle port, the benchmark for Asian coal, fell to US$70.35 per ton in the week ending June 27, its lowest since September 2009, according to figures compiled by Bloomberg.

Indonesia'€™s coal reference price (HBA) was set at $72.45 per ton this July, which was 11.5 percent lower than the $81.9 per ton set for January this year.

Despite the declining trend, Indonesian coal companies set higher production targets this year. For instance, PT Adaro Energy, which is one of the top five global thermal coal exporters, aims to produce between 54 and 56 million tons this year, an increase of around 7 percent compared to its 52.3 million tons last year.

The Indonesian Coal Mining Association (APBI) has also called on the government to act on illegal coal mining as opposed to capping production.

APBI said illegal mining had resulted in the theft of 56 million tons of coal in 2012, contributing to a prolonged oversupply in the global market, which increased stockpiles and, in turn, led to a fall in prices.