Coal Mining Indonesia: Focus on Other Markets than China
Indonesia's Ministry of Energy and Mineral Resources expects coal shipments to India to rise in 2016, while coal exports to China are expected to decline further as the world's second-largest economy is experiencing a persistent slowdown (and China curbed imports of coal with a lower calorie grade). Adhi Wibowo, Director for Coal at the Energy Ministry, said - contrary to China - coal demand from India has not fallen. Moreover, India is highly dependent on Indonesia for its thermal coal.
The sluggish global economy, particularly China's slowdown, has been plaguing global coal prices hence making the coal mining industry an unattractive one. The benchmark thermal coal reference price of Indonesia (Harga Batubara Acuan, or HBA), set by the Energy Ministry each month, declined another 1.69 percent (m/m) to USD $53.51 per metric ton (FOB) in December 2015, touching a new all-time record low level (this reference price was started in 2009).
In the January-November 2015 period, coal imports into China fell over 30 percent year-on-year from the same period last year, partly due to the slowdown as well as to the government's policy to curb imports of low grade coal.
Hendra Sinadia, Executive Director at the Indonesian Coal Mining Association (APBI), said Indonesia - given the current situation - cannot rely on China for its coal exports. Indonesia's coal industry should therefore focus on the domestic market, particularly now as new coal-fired power plants are set to start operations in 2016.
Data from Indonesia's Energy Ministry show that in 2014 China was Indonesia's largest export market for coal shipments. During 2014 Indonesia shipped a total of 41.54 million tons of coal to China. India was the second-largest export market for Indonesian coal in 2014 (37.48 million tons).
Read Column: Overview & Analysis of Indonesia's Coal Industry
Wibowo added that - besides India - the Philippines, Pakistan and Malaysia are still interesting export markets for Indonesian coal and form an opportunity for Indonesian coal miners.
In the January-November 2015 period Indonesia exported 253 million tons of coal, down 27.71 percent (y/y) from its export performance in the same period one year earlier. Meanwhile, Indonesia produced 335 million tons of coal in the first eleven months of 2015, down 20 percent (y/y).
Indonesian Production, Export, Consumption & Price of Coal:
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015¹ | |
| Production (in million tons) |
217 | 240 | 254 | 275 | 353 | 412 | 474 | 458 | 425 |
| Export (in million tons) |
163 | 191 | 198 | 210 | 287 | 345 | 402 | 382 | |
| Domestic (in million tons) |
61 | 49 | 56 | 65 | 66 | 67 | 72 | 76 | |
| Price (HBA) (in USD/ton) |
n.a | n.a | 70.7 | 91.7 | 118.4 | 95.5 | 82.9 | 72.6 | 60.1 |
¹ indicates forecast
Source: Indonesian Coal Mining Association (APBI)
Indonesian Government's Benchmark Thermal Coal Price (HBA):
| Month | 2012 | 2013 | 2014 | 2015 |
| January | 109.29 | 87.55 | 81.90 | 63.84 |
| February | 111.58 | 88.35 | 80.44 | 62.92 |
| March | 112.87 | 90.09 | 77.01 | 67.76 |
| April | 105.61 | 88.56 | 74.81 | 64.48 |
| May | 102.12 | 85.33 | 73.60 | 61.08 |
| June | 96.65 | 84.87 | 73.64 | 59.59 |
| 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