COAL INDUSTRY PERFORMANCE PRETTY GOOD

The Ministry of Energy and Mineral Resources reports that national coal production during February 2013 reached 33 million tons. A total of 25 million tons are sold to the export market, and the rest to meet domestic needs. Production figures are relatively stable last month compared to production realization in January. With additional production during February, national coal production in the reached two months of this year has reached 66 million tons. “Performance of coal production and export nationally is quite good”, said Edi Prasodjo, Director of Coal Business Development of the Ministry of Energy and Mineral Resources in Jakarta on Tuesday (July 9).

               

Edi said that the national coal production is currently supported by an increase in the performance of each coal mining company. With a quite high amount of coal production at the beginning of the year, the Ministry of Energy and Mineral Resources is optimistic that throughout 2013, the national coal production could reach 391 million tons. The estimated figure is slightly higher or 1.3% over last year’s actual production which reached 386 million tons. For this year, the government projected coal export to reach306 million tons. The domestic market is projected to absorb up to 85 million tons, or will exceed the domestic market obligation (DMO) set at 74.3 million tons.

               

Edi said that the realization of coal production from 2008 to 2012 has reached 1 billion tons. Unfortunately, of the total production, about 75% - 79% per year is for export. Average realization of coal production per year ranges from 177 million tons to 230 million tons. While, exports are averagely around 133 million tons to 174 million tons. According to Edi the export figure is still reasonable because the State Budget (APBN) is targeting state revenue from coal. On the other hand, domestic coal demand is still 20%.

               

Currently, domestic coal demand is still 20% of the total national coal production. However, if domestic demand for coal increases, particularly for power generation needed by the State Electricity Company (PLN) at 100 million tons in 2017, there is an obligation for coal companies to ensure the fulfillment of domestic needs in accordance with the Work and Budget Plan (RKAB).

               

Edi said that Indonesia coal production is more widely sold to China and India as a source of energy for power generation. According to him, the country’s largest coal importers such as China, Japan, and South Korea began to absorb the supply of coal production from Indonesia. That is, demand for coal is estimated to raise prices of coal to a more stable one in the future. Coal exports had declined quite significantly last year. But with the increase in demand, coal price is predicted to strengthen.

               

He explained that Indonesia is the largest coal supplier to India by selling around 77 million tons this year. This figure is about 42.7% - 46.6% of the target of coal imports this year at 165 million – 180 million tons. Australia came in the second place by supplying 26.8 million tons of coal to India. While, South Africa showed the most significant increase at 43% to 17.4 million tons. With the South African government policies, this country has the potential to replace Australia as the second largest supplier of coal for power generation in India. In addition to south African, new coal producers are currently emerging, such as Mongolia, Canada, New Zealand, and United States whose products began pounding markets. (E)

Business News - July 12,2013