Coal Mining Industry Indonesia Update: Rising Price in August

Bambang Gatot Ariyono, Director General of Coal and Mineral Mining at Indonesia's Energy and Mineral Resources Ministry, said the rising benchmark coal price of Indonesia is largely due to policies of the Chinese government. Miners in China now produce less coal and therefore the nation's second-largest economy needs more coal imports, hence supporting international coal prices.

Moreover, coal demand in Southeast Asia has increased as well, particularly from Malaysia.

The HBA price, set by Indonesia's Energy and Mineral Resources Ministry each month, is based on (1) the Platts Kalimantan (5,900 kcal/kg GAR assessment), (2) the Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR), (3) the Newcastle Export Index - formerly the Barlow-Jonker index (6,322 kcal/kg GAR) - and (4) the globalCOAL Newcastle (6,000 kcal/kg NAR) index.

Hendra Sinadia, Deputy Executive Director of the Indonesian Coal Mining Association (APBI), said the Newcastle index - one of the components within the HBA - rose significantly over the past month as there emerged some concern about Australian coal supplies due to strike actions. Sinadia added that the HBA price - currently at +USD $80 per ton levels - is already much better than initially assumed by APBI. The institution earlier believed the coal price would be around USD $75 per ton in 2017. Although there are various external factors that affect the coal price, Sinadia hopes the price will remain stable in the remainder of the year.

Indonesian Government's Benchmark Thermal Coal Price (HBA):

Month	2012	2013	2014	2015	2016	2017
January	109.29	87.55	81.90	63.84	53.20	86.23
February	111.58	88.35	80.44	62.92	50.92	83.32
March	112.87	90.09	77.01	67.76	51.62	81.90
April	105.61	88.56	74.81	64.48	52.32	82.51
May	102.12	85.33	73.60	61.08	51.20	83.81
June	96.65	84.87	73.64	59.59	51.87	75.46
July	87.56	81.69	72.45	59.16	53.00	78.95
August	84.65	76.70	70.29	59.14	58.37	83.97
September	86.21	76.89	69.69	58.21	63.93
October	86.04	76.61	67.26	57.39	69.07
November	81.44	78.13	65.70	54.43	84.89
December	81.75	80.31	69.23	53.51	101.69

^{in USD/ton
Source: Ministry of Energy and Mineral Resources}

Indonesian Production, Export, Consumption & Price of Coal:

	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016
Production (in mln tons)	217	240	254	275	353	412	474	458	461	434
Export (in mln tons)	163	191	198	210	287	345	402	382	366	343
Domestic (in mln tons)	61	49	56	65	66	67	72	76	87	91
Price (HBA) (in USD/ton)	n.a	n.a	70.7	91.7	118.4	95.5	82.9	72.6	60.1	61.8

^{Sources: Indonesian Coal Mining Association (APBI) & Ministry of Energy and Mineral Resources}

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