Coal Production Indonesia Expected to Fall in 2016 & 2017

Bambang Gatot, Director General for Coal and Minerals at Indonesia's Energy and Mineral Resources Ministry, said especially the smaller Indonesian miners have been under severe pressure ever since coal prices slid after 2011 because these companies have less cash reserves to fall back on. Ceasing production is basically the only option as production costs exceed sales income.

Indonesia's coal production is estimated to reach 419 million tons in 2016 and 409 million tons in 2017 according to Gatot. Part of the problem is that India's demand for coal is expected to decline as the nation is eager to purchase higher quality coal from Australia, South Africa and Colombia (Indonesian coal consists mostly of the lower-quality type). Coal accounts for more than 60 percent of power generation in India and over 75 percent of its electricity production. In February 2016 the nation had doubled the clean-energy tax on coal in an effort to combat environmental pollution. This tax has a bigger impact on low-grade coal than on high-grade coal and therefore India prefers to import high grade coal from Australia, South Africa and Colombia.

Fabio Gabrieli, Trading Director for Dry Bulk and Energy at Mercuria Energy, expects the global thermal coal trade to fall by 30 million tons in 2016 particularly due to declining demand in Europe and India. With a narrow gap between the gas and coal price Europe is expected to reduce the use of coal for its power generation. While coal demand in Europe, India and also China is on the decline, Gabrieli sees rising coal demand in countries such as Thailand, the Philippines, Malaysia, Vietnam, South Korea and Japan. It are these countries "where the growth is", he said at the Coaltrans Asia conference in Bali on Monday (30/05), as "around 50 GW of coal-fired capacity is to be commissioned in these nations before the end of the decade."

Read more: Overview and Analysis of Indonesia Coal Mining Industry

The Indonesian government's benchmark thermal coal price (HBA) has more or less stabilized since February 2016 at the level of slightly over USD $51 per ton. Earlier the Indonesian Coal Mining Association (APBI) stated that the coal price is expected to remain near this level in the remainder of 2016. The table below shows that Indonesia's coal price has halved over the past four years.

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

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

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

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lugano | 31 Mei 2016 22.26

Be careful where you go with your money.
Credit rating agencies such as Moody's are critical in their assessment of traditional energy companies.
For example Moody's downgraded Shell and the prospect is for the time being nagative. Peabody, the largest private coal company in the world, asked suspension of payments - the market value of Peabody plummeted since 2011 of about $ 20 billion to several tens of millions..

Misja Alexander | 01 Juni 2016 08.48

Key coal markets China and India seem to cut coal imports drastically... well, who is gonna buy Indonesian coal then? I guess it's time to focus on renewable energy...