Indonesian coal miners to increase 2018 production: ministry

1-Oct-2018

A group of Indonesian thermal coal miners have agreed to increase production for 2018 to around 507 million mt, a spokesman for the Indonesian Ministry of Energy and Mineral Resources told S&P Global Platts Wednesday.

Thirty-two coal producing companies had proposed the increase from the previous target of 485 million mt, the spokesman said.

The increased production is expected to be almost fully dedicated to the export market, the spokesman said, as relatively high export prices for most of the year were attractive to the producers, while domestic obligations were of less interest.

“When they proposed the increase in production they already knew they had fulfilled their domestic obligation,” the spokesman said.

The spokesman was unable to provide a breakdown of which companies had wanted to increase production, saying some were hesitant over their ability to meet current obligations due to rainfall affecting mining operations, and a short supply of available mining equipment in the country.

“For example, one of the largest miners did not propose to increase production as they do not expect to achieve the previous production target,” the spokesman said.

FOB Kalimantan prices for 4,200 kcal/kg GAR thermal coal have moved within a wide range so far in 2018, peaking at $51.50/mt in late February — the highest level since Platts began the assessment in 2012 — and trading as low as $37.50/mt in late August.

The government thermal coal reference price, also known as Harga Batubara Acuan, or HBA — which incorporates Platts Kalimantan 5,900 kcal/kg GAR price — has also achieved multi-hear highs in 2018 with the August reference price of $107.83/mt being the highest level since March 2012.

Indonesia thermal coal exports have been higher year on year so far in 2018. According to the latest customs data (which covers January-July 2018), year-to-date exports were 173.57 million mt, 45 million mt higher than the year-ago period and the highest volume since 2014.

Source: S&P GLOBAL PLATTS