Coal news and updates

Indonesian coal miners mull revising 2022 production targets downwards

Indonesian thermal coal miners are mulling lowering their production targets for 2022 because of unavailability of heavy equipment and unseasonal rains, sources told S&P Global Commodity Insights July 26.

“We are discussing a revision of the production plan that we submitted to the government to lower it for this year because the heavy machinery we require is not available,” one Indonesia-based producer said.

“There is no penalty in producing lower volume than what you submitted as per the plan at the start of the year, but if one produces less volume, the approval for next year could be lower,” the producer said.

Another producer said that machinery had not been arriving in a timely manner since the start of the year, forcing miners to recalibrate production numbers.

The development comes at a time when global trade flows have been disrupted in the wake of Russia’s invasion of Ukraine. With Europeans banning imports of Russian coal, the coal trade from Russia to China, India, Thailand and other Southeast Asian countries has increased.
This has weighed on demand for mid-CV Indonesian coal and demand for Australian 5,500 kcal/kg NAR coal from Southeast Asian countries, sources said.

The 5,000 kcal/kg GAR coal price was assessed at $124/mt FOB on July 25, down from a high of $190/mt FOB on March 11, according to S&P Global Commodity Insights data.

While demand for Newcastle 5,500 kcal/kg NAR is still firm from Japan, South Korea and Taiwan, traders in other countries such as India, Thailand and Vietnam believe that Australian coal prices make it difficult to conclude a trade.

“There is no indication that Chinese demand will revive. So miners trimming their output targets might be making a wise move,” an Indonesian miner said.

A third Indonesian producer confirmed the reconsideration of production numbers due to the wet weather conditions and unavailability of heavy machinery, and also noted that the country’s export ban in January had also led to lower production year-to-date.

Production plans submitted to the government amount to 663 million mt of thermal coal being produced in 2022, up from 610 million mt in 2021, according to the Ministry of Energy and Mineral Resources.

In the first half of this year, Indonesia produced 315.28 million mt of thermal coal, up from 298.56 million mt in the same period of 2021. Production in 2021 was impeded by unseasonal rains and a severe COVID-19 wave in the country.