Coal Mining Sector Indonesia: Earlier Talks about Extension of Contracts
The Indonesian government plans to allow an earlier submission of a request for the extension of mining concessions. Stakeholders say that this would considerably strengthen the investment climate in Indonesia's mining sector, specifically the coal mining industry, on the back of improved legal certainty.
Indonesia's Energy and Mineral Resources Ministry plans to allow holders of long-standing Coal Contracts of Work (Perjanjian Karya Pengusahaan Pertambangan Batubara, or PKP2B) to request for an extension of its mining activities five years before their existing contracts expire (PKP2B).
However, the extension will also mean that PKP2B-holders, which are mostly the established larger players in Indonesia's mining sector, see their PKP2B contracts being replaced with the Special Mining Business License (in Indonesian: Izin Usaha Pertambangan Khusus, or IUPK). This is in line with the 2009 Mining Law (Law No. 4/2009 on Mineral and Coal Mining) that introduced the Mining Business License (IUP) and IUPK as the new legal vehicles in the mining industry.
Indonesian Government's Benchmark Thermal Coal Price (HBA):
| Month | 2017 | 2018 |
| January | 86.23↓ | 95.54↑ |
| February | 83.32↓ | 100.69↑ |
| March | 81.90↓ | 101.86↑ |
| April | 82.51↑ | 94.75↓ |
| May | 83.81↑ | 89.53↓ |
| June | 75.46↓ | 96.61↑ |
| July | 78.95↑ | 104.65↑ |
| August | 83.97↑ | 107.83↑ |
| September | 92.03↑ | 104.81↓ |
| October | 93.99↑ | 100.89↓ |
| November | 94.84↑ | 97.90↓ |
| December | 94.04↓ | |
| Average | 85.9↑ |
| 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 | 53.00 |
| August | 84.65 | 76.70 | 70.29 | 59.14 | 58.37 |
| 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 |
| Average | 95.5 | 82.9 | 72.6 | 60.1 | 61.8 |
in USD/ton
Source: Ministry of Energy and Mineral Resources
Indonesian Production, Export, Consumption & Price of Coal:
| 2014 | 2015 | 2016 | 2017 | 2018 | |
| Production (in million ton) |
458 | 461 | 456 | 461 | 507¹ |
| Export (in million ton) |
382 | 375 | 366 | 364 | 361¹ |
| Domestic (in million ton) |
76 | 86 | 90 | 97 | 146¹ |
| Price (HBA) (in USD/ton) |
72.6 | 60.1 | 61.8 | 85.9 | - |
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | |
| Production (in million ton) |
240 | 254 | 275 | 353 | 412 | 474 |
| Export (in million ton) |
191 | 198 | 210 | 287 | 345 | 402 |
| Domestic (in million ton) |
49 | 56 | 65 | 66 | 67 | 72 |
| Price (HBA) (in USD/ton) |
n.a | 70.7 | 91.7 | 118.4 | 95.5 | 82.9 |
¹ government target
Sources: Indonesian Coal Mining Association (APBI) & Ministry of Energy and Mineral Resources
The text above is short summary of the article that is included in the November 2018 edition of our research report. This article discusses:
(1) the planned revision of Indonesian Government Regulation No. 23/2010;
(2) reactions from stakeholders in Indonesia's coal mining industry;
(3) an update on the coal mining industry of Indonesia.
Read the full article in the November 2018 edition of our monthly research report (scheduled to be released in early December 2018). You can purchase this report by sending an email to info@indonesia-investments.com or a WhatsApp (WA) message to the following number: +6287884106944
