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Jakarta Post

Coal output drops as miners squeezed by prolonged low prices

  • Raras Cahyafitri

    The Jakarta Post

Jakarta   /   Mon, January 18, 2016   /  05:52 pm
Coal output drops as miners squeezed by prolonged low prices

The country saw a two-digit-drop in coal production in 2015 as plunging prices have pushed miners, particularly the small-scale players, to reduce activity.

The Energy and Mineral Resources Ministry'€™s director for coal, Adhi Wibowo, said on Friday that national coal output reached 392 million tons in 2015, decreasing by around 14 percent from 458 million tons in the previous year. Of the total output, the export volume stood at 295.45 million tons, decreasing by 23 percent from 381.97 million tons in 2014.

Adhi said that lower national production would be in line with the government'€™s plans to secure reserves and resources for future use.

'€œIt'€™s good to see lower [coal] exports. It means that our coal reserves will last longer,'€ Adhi said.

For the first time since 2012, the country posted coal production below 400 million tons. In the past years, production continued rising as the commodity'€™s price lured producers to dig more to earn rising profits. Amid lower demand, falling coal prices have affected producers.

The coal at Australia'€™s port of Newcastle, the benchmark for thermal coal, was traded at US$49.6 per ton in the week ending Jan. 8, according to data from Globalcoal cited by Bloomberg. The price was the lowest level since 2006. From January to December 2015, Indonesia'€™s reference price, known as the HBA, lost around 16 percent to $53.51 per ton from $63.84 per ton set in January.

Global coal miners have been struggling to stay afloat amid low selling prices resulting from weakening growth in demand from major consumers amid a sluggish global economy.

While the national total output was lower, some big miners have recorded higher production volume, in a move seemed to balance the low price. State-owned PT Bukit Asam reported 20 percent higher production at 19.17 million tons in 2015 compared with 16.37 million tons a year earlier. The company attributed the increase to improved infrastructure and transportation facilities.

In 2016, Bukit Asam, whose shares are traded on the Indonesia Stock Exchange under code PTBA, is aiming to report 34 percent growth in production to 25.75 million tons, according to corporate secretary Joko Pramono.

'€œPTBA is expecting to maintain a sound financial performance on several moves, including the usage of its own power plants [to support mining activities], reducing hauling distances and prioritizing sales of high-ranking coal to export markets,'€ Joko said.

A number of other coal miners have also proposed higher production this year, according to figures from the mineral and coal directorate general. For example, Kaltim Prima Coal, the biggest producer in the country, has proposed production of 62 million tons this year, rising by around 9 percent from the estimated 2015 production of 56.9 million tons.

Its sister firm, PT Arutmin Indonesia, the third-biggest coal miner in the country, proposed a major 27 percent jump in production this year to 32.2 million tons from an estimated realized output of 25.35 million tons in 2015.

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