Coal news and updates

After flexing its regulatory muscle with the ore-export ban, the government has gone one step further in exerting its power over the mineral sector by closely supervising the coal-mining industry including a production quota for coal.

 

The effort to limit coal output is reflected in the lower production target set by the Energy and Mineral Resources Ministry: To 397 million tons this year from 421 millions tons in 2013, or a 6 percent decrease.

 

R. Sukhyar, the director general of minerals and coal at the ministry, said he had prepared a move to control the production, by assessing the work plan of mining companies that have mostly set higher production targets this year. “The easiest way to control coal production is through the work plan and budget [WP&B] of the companies. We will review their WP&Bs,” Sukhyar said.

 

In the past few years, the country has seen booming coal production, making it a major coal exporting country, although Indonesia’s coal reserves only account for about 2-3 percent of the global reserves. 

 

According to figures from the directorate general for minerals and coal, reserves stand at 31.96 billion tons, of which 8.9 billion tons are proven.

 

The figures also show that significant jumps in national coal production were seen in 2012 and 2011 respectively with 15 and 28 percent rises as mining companies boosted production to reap the benefit of 

increased selling prices. 

 

Production from Indonesia, the world’s largest exporter of coal for power plants, kept growing despite weakening global prices, which flooded the already-saturated market and eventually pushed the coal price down further.

 

On the other hand, domestic coal consumption was far below production growth. Of the 421 million tons produced last year, only 17 percent, or 72 million, was absorbed by the domestic market. In 2012 and 2011, the domestic market absorbed a mere 16 percent and 18 percent of total production, respectively.

 

Under its long-term plan, the ministry is only expecting to see national production increase by around 5 percent starting from 2015. Meanwhile, domestic consumption will be boosted by double digits starting next year, while exports would be suppressed.

 

The chairman of the Indonesian Coal Mining Association (APBI), Bob Kamandanu, said production control would mean nothing should illegal mining continue.

 

“When production is capped, there will be a volume gap that will be covered by illegal mining. They are uncontrollable. We are ready to comply with the limit and know that the result will be positive. However, it’s better to first close the illegal activities,” he said.

 

Indonesian Geologist Association (IAGI) chief of natural resources division Singgih Widagdo, meanwhile, said the government should give mining companies time to adjust to the production limit. “Many companies have invested so their production capacity is far higher than the government’s target,” he said. 

 

Power plants and the cement industry are currently the biggest domestic consumer of coal. 

 

Sukhyar expected that a number of soon-to-be developed smelters and refineries, following the implementation of the mineral ore export ban, would help boost domestic coal consumption.

 

He said the ministry also planned to encourage domestic consumption, including supporting mine-mouth power plant development and the usage of coal for other purposes, such as coal liquefaction or gasification.

 

 

Source: http://www.thejakartapost.com/