Coal Mining Update: Production, Export & Domestic Consumption

author : Administrator

Domestic coal demand in Indonesia is estimated - by the Indonesian government - to reach 114.51 million tons in 2018, up around 6 percent from estimated demand in 2017. Bambang Gatot, Director General for Coal and Minerals at the Energy and Mineral Resources Ministry, said coal-fired power plants remain the biggest domestic consumers of coal.

Although coal demand from other domestic industries is rising, it remains small compared to demand that stems from power plants. In full-year 2018 local power plants are estimated to consume 89.75 million tons of coal, or 78 percent of total estimated domestic coal consumption in Indonesia. The cement industry comes on second place with an estimated demand of 15.6 million tons in 2018, followed by the paper industry with demand estimated at 3.18 million tons.

Hendra Sinadia, Deputy Executive Director of the Indonesian Coal Mining Association (APBI), said the government's 2018 domestic coal consumption estimate is too optimistic as he detects not too significant growth, partly due to obstacles (for example land acquisition troubles) in electricity projects.

Supangkat Iwan Santoso, Director of Procurement at state-owned utilities firm Perusahaan Listrik Negara(PLN), said total cement consumption of power plants in Indonesia reached 76 million tons in 2017, up from 70 million tons in the preceding year. Contrary to Sinadia, he expects to see significant growth in domestic coal consumption this year as electricity demand is rising in Indonesia. Meanwhile, existing power plants continue to raise output capacity and therefore require more coal.

Although the Indonesian government is eager to curtail coal production in order to safeguard enough supplies for future generations (while also encouraging more domestic consumption of coal rather than simply exporting coal to other nations), Bambang Gatot said the government would allow a five percent year-on-year increase in coal production in 2018 (from production realization in the preceding year). Coal miners are encouraged to produce more coal as the coal price has been rising rapidly since the second half of 2016.

Moreover, many new coal mining companies are now set to start operations. There are now about 2,000 mining permit holders (in Indonesian: Izin Usaha Pertambangan, IUP) that have completed their feasibility studies - or construction at their facilities - and are ready to commence production. As production is estimated to rise in 2018, exports should rise accordingly, driven by Asia-Pacific demand.

Source: Indonesia Investment

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