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Ministry to raise coal output by 9.5%
The government says it is expecting to see higher coal production next year with the hope it will get more income to offset the continuing decline in global prices
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The government says it is expecting to see higher coal production next year with the hope it will get more income to offset the continuing decline in global prices.
The Energy and Mineral Resources Ministry's mineral and coal director general, R. Sukhyar, said the coal output target for next year will be 460 million tons with 110 million tons to be allocated for domestic market obligations and the remaining 350 million tons would be for export.
The output target represents an increase of about 9.5 percent from the maximum output of 421 million tons previously expected for this year.
The government has been trying to limit coal production to between 397 million and 421 million tons ' the same level as last year's production ' as part of an attempt to save the resource for future use.
The mineral and coal directorate general said earlier that it expected to see national production increase by only around 5 percent per year starting from 2015.
'This is indeed a dilemma for us: maintaining coal production to be in line with the national energy policy or increasing contributions to state revenues,' Sukhyar said on Tuesday.
With higher coal output in 2015, the mineral and coal office is expecting income from the sector to increase by Rp 10 trillion, Sukhyar said. The target will increase contributions from the mineral and coal sector to go above the 2015 state budget of Rp 40.6 trillion.
The higher contributions from the higher production volumes is seen as necessary to offset the decline in coal prices. The Indonesian coal price reference, locally known as HBA, stood at US$64.65 per ton in December, a 21 percent drop compared to the $81.9 per ton in January.
Coal has become a significant contributor to state revenues. Under this year's state budget, contributions from the mineral and coal sector are targeted to reach Rp 39.67 trillion, of which around 70 percent is expected from coal.
The realization of the contribution is expected to be only around Rp 34 trillion, according to the mineral and coal office's secretary Paul Lubis. As of the end of November, the sector collected Rp 30.51 trillion for the state.
The low realization was partly because the country implemented a ban on the export of mineral ores starting on Jan. 12.
Indonesia has been known as a major exporter of coal, particularly the thermal coal used in generating power. Despite the status as one of the biggest exporters, the country in fact has no huge amount of the commodity. Its coal reserves only account for about 2 to 3 percent of global reserves.
Figures from the mineral and coal office showed that the country's reserves stand at 31.96 billion tons, of which only 8.9 billion tons are proven.
Out of 421 million tons coal mined last year, only 17 percent, or 72 million tons, was absorbed by the domestic market. The remaining 349 million tons were sent overseas.
