Indonesian Coal Production to Fall to 400m Tons This Year Amid Low Domestic Demand i

By : Fidel Ali | on 8:28 PM February 06, 2014
Category : Business, Commodities, Markets

Jakarta. Indonesia’s coal output is estimated to decline by 5 percent this year after the government asked miners to reduce their production to conserve the energy resource as much as possible amid lower domestic demand.

“We are targeting 400 million tons of coal this year. That is a conservative target, but we will see how the condition is coming along this year,” Bob Kamandanu, head of the Indonesian Coal Mining Association (APBI), told Jakarta Globe on Monday. Bob is also chief executive at Delma Mining Corporation.

The government has asked coal miners to cap this year’s production at 397 million metric tons, down from 421 million tons in 2013, as domestic demand remains low.

The government allocated 73 million tons for the domestic market this year, up slightly from 72 million tons last year. Bob said the association’s estimate was slightly higher than that of government’s target as it takes account the production of illegal miners as well.

“We are optimistic that we can still produce at a higher level. We are still seeing huge demand from China and India,” Bob  said, adding that the coal price is expected to fetch $80 per ton this year.

The monthly average coal price was $85.3 dollars a ton last year, down 12 percent from a year earlier, based on Bloomberg data, citing Newcastle coal prices.

R. Sukhyar, director general for coal and mineral resources at the Energy and Mineral Resources Ministry, said last month that the country needed to conserve its coal reserves, anticipating a surge in domestic demand in the future, such as from mineral smelters, and cement and paper plants.

Still, many coal miners seek to increase their production to compensate for falling prices. Bumi Resources, the country largest coal producer, seeks to produce 97.8 million tons, up 15 percent from last year.

Adaro Energy, the second biggest, seeks to produce as much as 56 million tons, an 11 percent increase from 2013.

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