Indonesian government is expecting domestic coal demand to reach 114.51 MnT in 2018, up 6% Y-o-Y from the estimated demand of 2017, largely driven by the coal-fired power plants in the country.
Although the consumption of coal is also rising from other Domestic industries, however it remains small in comparison to the demand that arises from power plants.
In 2018, power plants are expected to consume 89.75 MnT coal, which is approximately 78% of the estimated demand. Cement industry with estimated demand of 15.6 MnT comes second, followed by paper industry with demand estimated at 3.18 MnT.
The difficulty in acquiring land permits for electric projects may provide hindrance to the growth of the power plants. However, coal consumption would be boosted by the rising electricity demand in the country. Total coal consumption of power plants reached 76 MnT in 2017, up from 70 MnT in 2016.
Moreover existing plants have also been raising their capacity output, which would require more coal.
Estimated Coal production in 2018
Indonesian government was keen to curtail coal production in order to preserve enough coal for future, however coal miners in the country would be encouraged to produce more, as the coal prices had yielded better realisation in 2017.
Indonesian thermal coal benchmark price HBA (or Harga Batubara Acuan) has increased 39% Y-o-Y to USD 85.9/MT in CY17, against USD 61.8/MT recorded in CY16.
Policy makers in the country are expecting that the government would allow 5% Y-o-Y increase in 2018 coal production.
Coal production would also be strengthened by the fact that many new mining companies are set to commence their operations. Currently, there are about 2000 companies in the country that holds coal mining permit.
With production set to increase in 2018, exports are also expected to rise accordingly driven by demand from both China and India.
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