Coal Mining Update Indonesia: Production, Export & Price
According to the latest data from Indonesia's Energy and Mineral Resources Ministry, the nation's coal production reached 163.4 million tons in the first half of 2018. This may seem a very low figure considering the Indonesian government targets national coal production at (a maximum of) 485 million in full-year 2018 (and not unoften this target is exceeded as local coal companies are eager to boost sales, particularly in times of high coal prices).
However, Agung Pribadi, Head of Communication at the Ministry of Energy and Mineral Resources, said the low first half (H1) coal production figure is actually 18 percent higher than the domestic coal production figure in the same period one year earlier.
Moreover, the official H1 coal production figure of 163.4 million is bound to rise as there usually occurs a delay in reporting of production figures by mining companies in the regions, especially on Sumatra and Kalimantan. This delay can take up to three months and therefore we expect to see the release of a more accurate H1 coal production figure by September.
Meanwhile, Indonesia's coal export volume reached 94.7 million tons in the first half of 2018, only slightly over a quarter of the government's full-year 2018 coal export target (set at 371 million tons). Wetter-than-usual weather over the past two months has been curtailing the nation's coal shipments to overseas markets. For example the cumulative rainfall in the province of South Kalimantan is 37 percent higher than the average so far in 2018.
Meanwhile, it was also reported that around 40 Indonesian coal ships - chartered by Indonesian traders with Surat Tanda Registrasi licenses - have been stranded (and will remain stranded for the next couple of weeks) until a resolution is found regarding their default in paying duties and taxes to the Indonesian government.
The combination of slower Indonesian coal exports (due to weather conditions), robust coal demand from China (where warm weather is encouraging more power usage), and growing imports by India, South Korea and Japan, have pushed the thermal coal price in Asia to a six-year high in June.
Indonesia's benchmark thermal coal price (Harga Batubara Acuan, or HBA) rose 8.3 percent to USD $104.65 per metric ton in July 2018 (from USD $96.61 per metric ton in the preceding month). The HBA is now at the highest level since April 2012. The HBA, which is determined by Indonesia's Energy and Mineral Resources Ministry on a monthly basis, is based on several global and domestic coal indexes.
Read also: Overview of Coal Mining in Indonesia
Meanwhile, state-owned utilities company Perusahaan Listrik Negara (PLN) complained that various local coal miners are reluctant to fulfill their obligations related to the domestic market program. Through the domestic market obligation (DMO) the Indonesian government forces local coal miners to supply part of their coal production to the domestic market, specifically to coal-fired power plants. Local miners are forced to sell 25 percent of their coal output under the DMO program for a maximum (and rather unattractive) price of USD $70 per metric ton.
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↑ | |
| September | 92.03↑ | |
| October | 93.99↑ | |
| November | 94.84↑ | |
| 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 | 485¹ |
| Export (in million ton) |
382 | 375 | 366 | 364 | 371¹ |
| Domestic (in million ton) |
76 | 86 | 90 | 97 | 121¹ |
| 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