Indonesia May Produce 406 Million Tons of Coal in 2018

Indonesia may produce 406 MnT coal next year, while exports are planned at 275 MnT, according to a government-mandated target. Domestic consumption, including for power plants and other industrial users, will be at 131 MnT.

The target is subject to change as the Energy and Mineral Resources Ministry is still calculating production plan submitted by miners.

“We have still to finish calculating the work and budget plan for 2018. We have asked producers to submit their plans,” Agung Pribadi, the energy ministry’s spokesman told Steelmint by phone on Friday, Dec 29.

Each year, coal miners which hold Coal Contract of Work (CCOW), must present annual production and export plan to the Energy and Mineral Resources Ministry for approval. Miners with CCoW, including PT Bumi Resources –Indonesia’s biggest coal producer – and PT Adaro Indonesia, account for 70-80 percent of Indonesia’s total production. Miners hold Mining Business License or IUP make up the remainder.

The Southeast Asian state has always exceeded its annual coal production target, at least in the past three years. In 2017, the energy ministry has announced production may hit 477 MnT, from an official target of 413 MnT. It’s also an increase of 4.6% from 2016 actual production of 456 MnT.

Rising China’s and India demand as well as purchase from emerging countries have boosted Indonesia’s coal exports this year, Pribadi said.

“China has allowed more imports because it keeps its working days policy at 330 days, while there is an increase in India’s imports and demand from new markets, such as Vietnam,” he said.

Higher coal prices have also lured miners to export more, Pribadi added.

Indonesia set coal benchmark price for December at USD 94.04/MT, lower than USD 101.69/MT in December last year, but it has risen from the January price at USD 86.23/MT.

The energy ministry said in August, Indonesia’s domestic consumers would burn an estimated 103 MnT coal in 2017. That means, around 374 MnT out of estimated output of 477 MnT would be shipped overseas this year.

Indonesia has exported around 320 MnT coal in January to October 2017, up from 304.4 MnT in the same period in 2016, according to Bank Indonesia’s data.