A certain section of Indonesian coal miners have begun selling coal at prices lower than production costs amid declining global demand for the commodity triggered by the ongoing pandemic.
Bob Kamandanu, Chairman of commodities trader PT Trafigura stated in a recent webinar that Indonesian coal, with calorific value of 4,200 kcal/kg GAR, was traded at a range of $23-24/t — far lower than its production cost of $27-28/t.
Bob said that even the leading coal mining companies in Indonesia could only secure production cost of $26/t for the GAR 4,200 coal. Indonesia is the only country producing coal with calorific value of GAR 4.200 kcal/kg.
Bob urged the government to discuss the declining coal price situation with the miners to help the country’s coal mining industry survive through the difficult situation.
Meanwhile, the Indonesian government may approve proposals made by coal miners to revise upward their initial 2020 coal production plans as long as the miners have already secured sales contracts for the extra output.
“If the company can show data of the coal (sales) contract with buyer, we’ll consider approving upward revision of coal production”, Irwandy Arif, Special Staff of Minister of Energy and Mineral Resources mentioned during a webinar.
Irwandy argued that such increase in coal production would not undermine coal price as the miners have already secured buyers. The government is currently reviewing the 2020 work plan and budget (RKAB) of coal miners, some of which have proposed upward revision in this year’s initial coal production target.
Irwandy earlier said that there are 30 coal mining companies that have submitted proposals to the Ministry of Energy and Mineral Resources to increase their coal production target this year.
The Indonesian government had initially set the country’s coal production target for this year at 550 mn t. Many have suggested the government to lower the coal production to help prevent coal prices from declining further amid oversupply and weak demand situation.
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