Indonesia has increased its 2018 coal production target to around 507 million metric tons from a previous target of 485 million tons, the Energy Ministry said on Wednesday (26/09. (Antara Photo/Puspa Perwitasari)

Indonesia's 2018 Coal Output Target Now Around 507m Tons: Energy Ministry

BY :WILDA ASMARINI AND BERNADETTE CHRISTINA MUNTHE

SEPTEMBER 27, 2018

Jakarta. Indonesia has increased its 2018 coal production target to around 507 million metric tons from a previous target of 485 million tons, the Energy Ministry said on Wednesday (26/09), a move that may add to downward pressure on prices for the fuel.

Indonesia is the world's top exporter of thermal coal, and it had earlier proposed additional output of up to 100 million tons to help the rupiah, whose value has fallen nearly 10 percent against the US dollar this year.

The government has issued additional output quotas of 21.9 million tons, split among 32 coal miners, Energy and Mineral Resources spokesman Agung Pribadi said in a text message.

Pribadi declined to provide details on the companies that received the additional quotas.

All of the additional output could be exported, he said, adding that no further applications for increases to 2018 coal output quotas are being reviewed by the ministry.

The country's miners, though, are being conservative about increasing output and may face difficulties due to heavy equipment shortages, said Hendra Sinadia, executive director of the Indonesian Coal Mining Association (APBI).

"This will definitely impact prices," Hendra said, referring to prices for coal with an energy content of up to 5,000 kilocalories per kilogram.

The Newcastle weekly index, the Asian benchmark, has declined 6 percent since Aug. 1, and was at $113 a ton as of Friday.

"From August to September [prices] declined a lot," he said.

The Indonesia Coal Benchmark Price (HBA) was set at $104.81 in September, down from $107.83 a ton in August, government data showed.

Also, the low-calorie coal market is already saturated, Sinadia said.

As well, weaker demand from key buyer China could dampen Indonesia's hopes of exporting the additional supply, consulting firm Wood Mackenzie said.

"The government's attempt to boost exports is unlikely to meet its desired goals," Woodmac said in a recent research note.

Separately on Wednesday, state-owned electricity utility Perusahaan Listrik Negara (PLN) revised its 2018 coal consumption target down for Southeast Asia's largest economy, amid slower growth.

Indonesia's coal consumption for power by PLN and independent power producers is expected to reach 88.5 million tons in 2018, below a 2018 target of 92 million tons, PLN coal contract manager Tri Joko told reporters.

But in 2019, PLN expects coal consumption to increase to 96 million tons, Joko said.

"There are several PLN and independent power station projects that will come up this year and in 2019," he said, adding that PLN's forecast for economic improvement in Indonesia will mean more coal is required.

Indonesia's coal consumption for power was at 82.2 million tons in 2017.

Reuters

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