Coal news and updates

Miners kept pumping up coal production in the first quarter of the year to offset a continuing price decline, defying the government’s attempts to help the price rebound and secure supplies for domestic needs.

 

According to figures from the Energy and Mineral Resources Ministry, coal production reached 110 million tons in the first three months of the year, increasing by around 4.5 percent from 105 million tons in the same period last year. 

 

The data also shows that only 29 million tons were sold domestically, with the remaining 81 million tons shipped overseas.

 

The first quarter output exceeded 25 percent of the government’s maximum target of 421 million tons in total production by year-end — the same amount of production last year.

 

However, the ministry said this year’s output would not exceed the target.

 

“[First quarter] production was in line with our target,” the ministry’s director for coal, Edi Prasodjo, said.

 

“Of the total production, 75 million tons came from mining companies holding PKP2B [coal mining business permits] that have binding sales agreements with buyers.”

 

The government is planning to cap coal production volume to support the price of coal — which is now at a four-year low — and secure sources for the country’s mixed energy policy. 

 

Edi added that his office would cooperate with local administrations to prevent coal miners from exceeding the production levels specified in their approved work plans and budgets.

 

Indonesia was one of the world’s major coal exporters, although its coal reserves only accounted for 0.6 percent of total global reserves, according to the ministry.

 

But with continually growing production and low domestic absorption compared to export volume, Indonesia may no longer have the commodity when it most needs it.

 

The country’s coal reference price for April was set at US$74.81 per ton, down by almost 3 percent from March’s benchmark price. The thermal coal price at the Australian port of Newcastle — the benchmark for Asia’s coal price — stood at $73.52 per ton at the end of the first week of April, according to data from London-based globalCOAL as quoted by Bloomberg.

 

Coal miners have been suffering from declining coal prices since 2012, driven by weakening global economic growth. The use of other energy sources, like liquefied natural gas (LNG) and shale gas, has only added pressure to the coal price despite the limited global recovery, analysts have said.

 

A recent CIMB Securities report said that China’s thermal coal imports rose by 6 percent in 2013 to 212 million tons, but its LNG imports grew far higher, by 23 percent. 

 

Moreover, Chinese coal miners are increasingly able to meet domestic demand with lower costs on the back of better infrastructure facilities, creating tougher competition for foreign players producing at higher costs. 

 

Several Indonesian firms are trying to diversify their markets beyond China. 

 

Indonesian Coal Mining Association (APBI) deputy chairman Herman Kasih previously said demand would likely come from countries like Japan, which needed to replace the nuclear power plants it had shut down, possibly boosting Indonesia’s coal production to 450 million tons.

 

State-owned PT Bukit Asam’s (PTBA) corporate secretary, Joko Pramono, said the company had received delivery of 300 train carts in early April, which would facilitate the firm’s coal transportation and eventually support its production growth. 

 

It aims to achieve a 39 percent year-on-year increase in coal sales volume this year, to 24.7 million tons.

 

 

Source: The Jakarta Post