Indonesia: Adaro Energy’s Jan-Sep Coal Output Drop, Met Coal Production Climb

Adaro Energy has reported its coal production in the first nine months of 2018 fell by 1% to 38.98 MnT, from 39.36 MnT in January to September 2017.

But despite a lower production, Adaro maintains production guidance of 54 – 56 MnT for 2018 as delivery of new mining equipment continues.

The country’s second biggest coal producer sold 39.27 MnT of coal in January to September period, barely changed from 39.44 MnT in the same period in 2017.

Sales to Southeast Asia, including Indonesia, comprised 38% of total sales volume in the first nine months of this year. East Asia came second, contributing 31%, followed by India and China with 13% each. India had a bigger portion compared to the same period last year due to the significant increase in country’s demand for coal import.

Production of semi-soft coking coal and high grade thermal coal from Adaro MetCoal Companies (AMC) rose by 27% to 0.86 MnT in the first nine months of this year, from the same period last year.

AMC sold 0.71 MnT in January-September 2018, a 15% increase from the same period last year. AMC’s coal was sold to customers in Japan, Thailand, Indonesia, India, China and Europe.

On August 1, 2018, Adaro Energy with EMR Capital Ltd (EMR) completed the acquisition of Rio Tinto’s 80% interest in the Kestrel Coal Mine (Kestrel) as Adaro seeks to tap demand from steel miners. EMR and Adaro Energy will jointly manage and operate the Kestrel mine, which produces mainly premium quality hard-coking coal.

Adaro reported, Kestrel mined 0.57 MnT and 0.52 MnT of saleable hard-coking coal in August and September respectively. It sold 0.34 MnT in August and 0.44 MnT in September.

In its report, Adaro said solid fundamentals remained in the metallurgical coal market and are expected to continue as a result of limited supply addition, due to critical port congestion at DBCT Australia and Hurricane Florence that threatened US supplies and strong demand from steel producers.

“There has been no significant capacity expansion, which creates the risk of supply disruption while demand stays solid,” Adaro noted in its report.

“China continues to demand top quality metallurgical coal, especially from Australia,on the back of seasonal restocking and healthy margins for steel production. This condition will support strong metallurgical coal price environment in the near-term.”